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.

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.

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.

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.

scholarly journals Testing Wagner’s Law and Keynesian Hypothesis in Selected Post‑Soviet Countries

2018 ◽  
Vol 66 (5) ◽  
pp. 1227-1237 ◽  
Author(s):  
Jeyhun A. Abbasov ◽  
Khatai Aliyev
Keyword(s):  
Government Expenditures ◽  
Kyrgyz Republic ◽  
Per Capita Gdp ◽  
Wagner’S Law ◽  
Long Run ◽  
Short Run ◽  
Research Findings ◽  
Per Capita ◽  
Wagner's Law ◽  
Modelling Approach

The aim of this research is to test Wagner’s law and Keynesian hypothesis in 9 Post‑Soviet countries – Estonia, Latvia, Lithuania, Uzbekistan, Azerbaijan, Georgia, Kyrgyz Republic, Moldova, and Ukraine. For this purpose, long‑ and short‑run causality between real per capita GDP and real per capita government expenditures are estimated by employing ARDL modelling approach. Estimation results support validity of Wagner’s law for Latvia, Lithuania, Uzbekistan, Georgia, Kyrgyz Republic and Ukraine, and validity of Keynesian hypothesis for Estonia, Uzbekistan, Azerbaijan, Kyrgyz Republic, and Moldova in the long‑run. Meanwhile, research findings indicate strong bidirectional short‑run causality in all countries except Lithuania and Kyrgyz Republic in the short‑run.

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 Does Environmental Stress Affect Economic Growth: Evidence from the Gulf Cooperation Council countries?

2021 ◽  
Author(s):  
Osama Daifalla D. Sweidan ◽  
Khadiga Elbargathi
Keyword(s):  
Economic Growth ◽  
Environmental Stress ◽  
Panel Cointegration ◽  
Positive Influence ◽  
Cointegration Analysis ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Long Run ◽  
Short Run ◽  
Per Capita

Abstract This paper empirically investigates the influence of environmental stress on economic growth in the GCC countries during (1995-2016). We use a panel cointegration analysis and compute an autoregressive distributed lag model. Our paper is motivated by the high CO2 emissions per capita and environmental stress in these countries relative to other countries. We assume that the income per capita is a function of the natural resource’s rents and environmental stress. Our findings show that environmental stress has a positive and significant effect on economic growth, mainly in the long run. Further, the natural resources’ rents have a significant positive effect in the short run, while the long run impact is negative. Our paper’s policy implication states that economic policymakers should monitor and evaluate future environmental stress outcomes in these countries. There is no guarantee that the positive influence prevails. Therefore, they should diversify their economies and energy resources.Jel Classification: Q51, Q56.

scholarly journals Investigating the potential role of innovation and clean energy in mitigating the ecological footprint in N11 countries

2022 ◽  
Author(s):  
Menna Sherif ◽  
Dalia M. Ibrahiem ◽  
Khadiga M. El-Aasar
Keyword(s):  
Technological Innovation ◽  
Ecological Footprint ◽  
Causal Relation ◽  
Panel Cointegration ◽  
Clean Energy ◽  
Cointegration Analysis ◽  
Energy Sources ◽  
Long Run ◽  
Panel Cointegration Test ◽  
Per Capita

AbstractThis paper seeks to explore the potential function of technological innovation and clean power in mitigating the ecological footprint in the N-11 nations during the phase 1992–2015 by applying panel cointegration analysis. The outcomes of the panel cointegration test signify the occurrence of a long-run relation among the clean energy (CE) variable, the ecological footprint (EF) variable, the per capita GDP (Y) variable, the financial development (FIN) variable, and technological innovation (TI) variable. The outcomes of the VECM signify a long-run causal relation from the ecological footprint (EF) variable to the clean energy (CE) variable, the GDP per capita (Y) variable, and technological innovation (TI) variable. This implies that the environmental degradation faced by the N-11 countries leads to shifting toward clean energy sources and technological innovation in the long run. Thus, the N-11 countries are in need to design policies that enhance shifting toward environmentally friendly energy sources.

Testing Wagner's Law For The European Union Economies

2011 ◽  
Vol 18 (4) ◽  
Author(s):  
Stella Karagianni ◽  
Maria Pempetzoglou ◽  
Soultana Strikou
Keyword(s):  
Government Expenditure ◽  
National Income ◽  
Likelihood Method ◽  
The European Union ◽  
Causality Test ◽  
Wagner’S Law ◽  
Econometric Methods ◽  
Long Run ◽  
Time Period ◽  
Wagner's Law

This paper examines the validity of Wagner’s law in the EU-15 member-states for the time period 1949-1998. For investigating the existence of a long run and causal relationship between government expenditure and national income, three of the most advanced econometric methods, the Engle-Granger cointegration test, the Johansen maximum likelihood method and the Granger causality test have been applied to six alternative functional interpretations of the law. The results are very ambiguous and our main findings suggest that the validity or invalidity of Wagner’s law is very sensitive to the method applied.

scholarly journals The Causality between Education and GDP Growth in Asian Countries

2015 ◽  
Vol 50 ◽  
pp. 28-35 ◽  
Author(s):  
Mohsen Mehrara ◽  
Maysam Musai
Keyword(s):  
Economic Growth ◽  
Formal Education ◽  
Panel Cointegration ◽  
Capital Formation ◽  
Cointegration Analysis ◽  
Point Of View ◽  
Asian Countries ◽  
Variable Model ◽  
Long Run ◽  
Educational Investments

This paper investigates the causal relationship between education and GDP in 40 Asian countries by using panel unit root tests and panel cointegration analysis for the period 1970-2010. A three-variable model is formulated with capital formation as the third variable. The results show a strong causality from investment and economic growth to education in these countries. Yet, education does not have any significant effects on GDP and investment in short- and long-run. It means that it is the capital formation and GDP that drives education in mentioned countries, not vice versa. So the findings of this paper support the point of view that it is higher economic growth that leads to higher education proxy. It seems that as the number of enrollments raise, the quality of the education declines. Moreover, the formal education systems are not market oriented in these countries. This may be the reason why huge educational investments in these developing countries fail to generate higher growth. By promoting practice-oriented training for students particularly in technical disciplines and matching education system to the needs of the labor market, it will help create long-term jobs and improve the country’s future prospects.

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.

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