scholarly journals On the linkage between government expenditure and output: empirics of the Keynesian view versus Wagner’s law

2020 ◽  
Author(s):  
Philip Arestis ◽  
Hüseyin Şen ◽  
Ayşe Kaya
Keyword(s):  
Government Expenditure ◽  
Wagner’S Law ◽  
Wagner's Law

scholarly journals Re-testing Wagner's Law: Structural breaks and disaggregated data for South Africa

2017 ◽  
Vol 9 (4(J)) ◽  
pp. 49-61
Author(s):  
Mthokozisi Mlilo ◽  
Matamela Netshikulwe
Keyword(s):  
South Africa ◽  
Structural Breaks ◽  
Government Expenditure ◽  
Active Role ◽  
Output Growth ◽  
Causality Test ◽  
Wagner’S Law ◽  
Education Expenditures ◽  
Wagner's Law ◽  
The Government

Direction of causality between government expenditure and output growth is pertinent for a developing country since a sizeable volume of economic resources is in the hands of the public sector. This paper investigates the Wagner's law in South Africa over the post-apartheid era, 1994-2015. This paper is unique to present studies since it uses disaggregated government expenditure and controls for structural breaks. The Granger non-causality test of Toda & Yamamoto, a superior technique compared to conventional Granger causality testing, is employed and this paper finds no support for Wagner's law. However, there is causality running from total government and education expenditures to output. This finding is in line with the Keynesian framework. It is recommended in the paper that the government should take an active role in promoting output growth through increases in education expenditures in particular.

PENGUJIAN WAGNER'S LAW VERSUS KEYNESIAN HYPOTHESIS: PENDEKATAN REGIONAL INDONESIA

2021 ◽  
Vol 2 (2) ◽  
pp. 181-193
Author(s):  
Esti Pasaribu ◽  
Septriani Septriani
Keyword(s):  
Government Expenditure ◽  
Granger Causality Test ◽  
Empirical Theory ◽  
Causality Test ◽  
Wagner’S Law ◽  
Long Run ◽  
Wagner's Law ◽  
The Government ◽  
The Relationship ◽  
Positive Effect

In this paper, we tested the Wagner’s Law against the Keynesian Hypothesis for Indonesia using granger causality test. After conducting theoretical and empirical theory, this paper is analysing the relationship between government expenditure and GDP percapita. The long run parameters and causality test found valid Wagners’ Law in Indonesia not Keynesian Hypothesis. The results reveal a positive and statistically significant long run effect running from economic growth toward the government expenditure refer to Wagner’s Law in Indonesia. Further more, the growth of population is giving a positive effect for government expenditure also.

Increasing Public Expenditure: Wagner’s Law in OECD Countries

2011 ◽  
Vol 12 (2) ◽  
pp. 149-164 ◽  
Author(s):  
Serena Lamartina ◽  
Andrea Zaghini
Keyword(s):  
Government Expenditure ◽  
Panel Cointegration ◽  
Cointegration Analysis ◽  
Capita Gross Domestic Product ◽  
Wagner’S Law ◽  
Catching Up ◽  
Long Run ◽  
Proportional Increase ◽  
Per Capita ◽  
Wagner's Law

Abstract The paper proposes a panel cointegration analysis of the joint development of government expenditure and economic growth in 23 Organization Economic Cooperation and Development countries. The empirical evidence provides indication of a structural positive correlation between public spending and per-capita gross domestic product (GDP), which is consistent with the so-called Wagner’s law. A long-run elasticity larger than 1 suggests a more than proportional increase of government expenditure with respect to economic activity. In addition, according to the spirit of the law, we found that the correlation is usually higher in countries with lower per-capita GDP, suggesting that the catching-up period is characterized by a stronger development of government activities with respect to economies in a more advanced state of development.

scholarly journals Re-testing Wagner’s Law: Structural breaks and disaggregated data for South Africa

2017 ◽  
Vol 9 (4) ◽  
pp. 49
Author(s):  
Mthokozisi Mlilo ◽  
Matamela Netshikulwe
Keyword(s):  
South Africa ◽  
Structural Breaks ◽  
Government Expenditure ◽  
Active Role ◽  
Output Growth ◽  
Causality Test ◽  
Wagner’S Law ◽  
Education Expenditures ◽  
Wagner's Law ◽  
The Government

Direction of causality between government expenditure and output growth is pertinent for a developing country since a sizeable volume of economic resources is in the hands of the public sector. This paper investigates the Wagner's law in South Africa over the post-apartheid era, 1994-2015. This paper is unique to present studies since it uses disaggregated government expenditure and controls for structural breaks. The Granger non-causality test of Toda & Yamamoto, a superior technique compared to conventional Granger causality testing, is employed and this paper finds no support for Wagner's law. However, there is causality running from total government and education expenditures to output. This finding is in line with the Keynesian framework. It is recommended in the paper that the government should take an active role in promoting output growth through increases in education expenditures in particular.

The Nexus between Government Expenditure and Economic Growth: Evidence of the Wagner’s Law in Kuwait

2019 ◽  
Vol 15 (1) ◽  
Author(s):  
Ali Ebaid ◽  
Zakaria Bahari
Keyword(s):  
Economic Growth ◽  
Government Spending ◽  
Time Series Data ◽  
Government Expenditure ◽  
Policy Instrument ◽  
Series Data ◽  
Causality Test ◽  
Wagner’S Law ◽  
Per Capita ◽  
Wagner's Law

Abstract This study is the first attempt to examine the validity of the Wagner’s law hypothesis by employing time-series data over the period from 1970 to 2015 in Kuwait. In this paper, the causal relationship between government expenditure and economic growth is tested by conducting the Granger non-causality test developed by (Toda, H. Y., and T. Yamamoto. 1995. “Statistical Inference in Vector Autoregressions with Possibly Integrated Processes.” Journal of Econometrics 66 (1): 225–250.) and (Dolado, J. J., and H. Lütkepohl. 1996. “Making Wald Tests Work for Cointegrated VAR Systems.” Econometric Reviews 15 (4): 369–386.). The empirical results support the unidirectional causality running from government spending to economic growth. This occurs only when real government expenditure per capita is a proxy for state activity and real gross domestic product (GDP) per capita is a measure of economic growth. This implies that Wagner’s law does not apply for Kuwait’s economy, and the Keynesian proposition of government spending as a policy instrument that encourages and leads economic growth is supported by the data used.

Growth of Government Expenditure in Bangladesh: An Empirical Enquiry into the Validity of Wagner's Law

2009 ◽  
Vol 9 (2) ◽  
pp. 1850162 ◽  
Author(s):  
Mohammad Abul Kalam ◽  
Nusrate Aziz
Keyword(s):  
Population Size ◽  
Government Expenditure ◽  
Social Progress ◽  
Wagner’S Law ◽  
The Real ◽  
Real Gdp ◽  
Long Run ◽  
Short Run ◽  
Per Capita ◽  
Wagner's Law

The study empirically investigates ‘Wagner's law,' the relationship between ‘social progress' and ‘growth of state activity' in an economy, using Bangladesh data from 1976 to 2007 in a bivariate as well as a trivariate framework incorporating ‘population size' as a third variable. The estimated results provide evidence in favour of Wagner's law for Bangladesh in both the short-run and long-run. There is a long-run cointegration relation among real government expenditure, real GDP and the size of population where government expenditure is positively tied with the real GDP (1.14), per capita GDP (1.51) and population size (0.21). Both the real GDP and GDP per capita Granger cause total government expenditure to change. Population size also comes up as a significant stimulus for public spending to grow in both the long-run and short-run.

scholarly journals Impact of Government Expenditure on Economic Growth In Sub-Saharan Africa: A Validity of Wagner’s Law

2021 ◽  
Vol 9 (02) ◽  
pp. 2039-2150
Author(s):  
Funsho Kolapo ◽  
Azeez Bolanle ◽  
Joseph Mokuolu ◽  
Taiwo Oluwaleye ◽  
Kehinde Alabi
Keyword(s):  
Economic Growth ◽  
Government Expenditure ◽  
Sub Saharan Africa ◽  
Capital Projects ◽  
Wagner’S Law ◽  
Distributed Lag ◽  
Negative Effect ◽  
Wagner's Law ◽  
Sub Saharan ◽  
The Impact

The study investigated the impact of government expenditure on economic growth with special inclination to testing the Wagner’s law in Sub Saharan Africa between 1986 and 2018. Adopting the Panel first generation tests as well as the Panel Auto Regressive Distributed Lag (ARDL) and Pairwise Causality techniques, it was revealed that government expenditure causes economic growth rendering the Wagner’s law is invalid in the Sub-Saharan region. Also, it was further discovered that capital and recurrent expenditure exert negative effect on economic growth while total expenditure has positive effect on economic growth in the region. Therefore, based on the negativity of capital and recurrent expenditure, it is recommended that capital and recurrent expenditure must be monitored effectively to ensure that its increase will not exert any negative effect on economic growth while stringent measures as well as checks and balances must be adopted to curb corruption in Sub-Saharan Africa to ensure that funds are used exclusively for their intended purposes especially those pertaining to capital projects.

scholarly journals The Validity of Wagner’s Law in India: A Post-liberalisation Analysis

2019 ◽  
pp. 1-13 ◽  
Author(s):  
Suraj Sharma ◽  
Surendra Singh
Keyword(s):  
Granger Causality ◽  
Urban Population ◽  
Public Expenditure ◽  
Government Expenditure ◽  
National Income ◽  
Causality Test ◽  
Wagner’S Law ◽  
Long Run ◽  
Percent Increase ◽  
Wagner's Law

Aims: The present study attempts to analyse the behavior of government expenditure in relation to national income using most appropriate advanced econometric techniques to test the Wagner’s law of increasing State’s activity in Indian scenario during the post-liberalisation period of 1988 to 2017. Data: The study uses the IMF database entitled “International Financial Statistics” and World Bank database entitled “World Development Indicators” for testing Wagner’s law for the Indian economy. Methodology: The study employs appropriate econometric techniques to our model where government expenditure is used as regressand and gross domestic product and urbanisation is used as regressors. The study first investigates for unit roots in data using ADF and PP tests. Further, to investigate any co-integration among variables the study employed Johansen co-integration test. Once co-integration is confirmed, a vector error correction model has been estimated and lastly, Granger causality test is applied to check for any causality. Results: The results of Vector Error Correction Model reveal that both the Gross Domestic Product and the urban population have a positive and statistically significant effect on government expenditure in the long-run. Ceteris paribus, every 1.0 percent increase in GDP leads 0.36 percent increase in government expenditure. On the other hand, 1.0 percent increase in urban population leads to a 3.75 percent increase in government expenditure. The Granger causality results divulge that there is unidirectional causality running from urban population to government expenditure, whereas neither unidirectional nor bidirectional causality was found between GDP and public expenditure. In short-run, neither GDP nor urban population influences public expenditure. Conclusion: To sum up, the present investigation provides support for Wagner’s law in case of India in the long run only. It has been found that urbanisation has a greater impact on public expenditure than the national income (GDP) and which is also supported by Granger causality test showing significant unidirectional causality running from level of urbanisation to government expenditure.

scholarly journals The validity of Wagner’s law in Egypt from 1960–2018

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Noha Hesham Ghazy ◽  
Hebatallah Ghoneim ◽  
Dimitrios Paparas
Keyword(s):  
Time Series ◽  
Time Series Analysis ◽  
Government Expenditure ◽  
Empirical Literature ◽  
Content Type ◽  
Wagner’S Law ◽  
Series Analysis ◽  
Wagner's Law ◽  
German Economist ◽  
The Relationship

Purpose One of the main theories regarding the relationship between government expenditure and gross domestic product (GDP) is Wagner’s law. This law was developed in the late-19th century by Adolph Wagner (1835–1917), a prominent German economist, and depicts that an increase in government expenditure is a feature often associated with progressive states. This paper aims to examine the validity of Wagner’s law in Egypt for 1960–2018. The relationship between real government expenditure and real GDP is tested using three versions of Wagner’s law. Design/methodology/approach To test the validity of Wagner in Egypt, law time-series analysis is used. The methodology used in this paper is: unit-root tests for stationarity, Johansen cointegration approach, error-correction model and Granger causality. Findings The results provide strong evidence of long-term relationship between GDP and government expenditure. Moreover, the causal relationship is found to be bi-directional. Hence, this study provides support for Wagner’s law in the examined context. Research limitations/implications It should be noted, however, that there are some limitations to this study. For instance, in this paper, the government’s size was measured through government consumption expenditure rather than government expenditure due to data availability, which does not fully capture the government size. Moreover, the data available was limited and does not fully cover the earliest stages of industrialization and urbanization for Egypt. Furthermore, although time-series analysis provides a more contextualized results and conclusions, the obtained conclusions suffer from their limited generalizability. Originality/value This paper aims to specifically make a contribution to the empirical literature for Wagner’s law, by testing the Egyptian data using time-series econometric techniques for the longest time period examined so far, which is 1960–2018.

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