Examining the Validity of Wagner’s Law in the OECD Economies

Bayrak, Metin; Esen, Ömer

doi:10.5296/rae.v6i3.5354

Cited by 13 publications

(10 citation statements)

References 29 publications

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“…The result shows that economic growth is a major factor influencing government expenditure in Nigeria. This finding is in conformity with most empirical evidence in the literature (Bayrak and Esen, 2014;Akinlo, 2013;Olomola, 2004). In contrast, the effect of the negative component of GDP (economic downturn) on government expenditure is negatively significant and larger in magnitude, with a 1% decrease in government expenditure resulting in about 3.83% decrease in government expenditure.…”

Section: Empirical Results and Discussionsupporting

confidence: 92%

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2018

RIC

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The kernel of the debate on the relation between government spending and economic growth is whether the former causes the latter or the latter causes the former. In addition, there is the issue of possibility of nonlinearity in the relation between government expenditure and economic growth. Purpose. The purpose of this paper is to examine the relations between government expenditure and economic growth in Nigeria. Design/Methodology/Approach. The nonlinearity and causality in the relation between government expenditure and economic growth are examined using nonlinear autoregressive distributed lag model (NARDL), vector error correction model (VECM) and causality. Findings/Implications. The findings show the existence of cointegration and nonlinear effect on the relation between government expenditure and economic growth in both long-and short-run. The results equally show unidirectional causality that runs from economic growth to government expenditure thus providing support for Wagner's law in Nigeria.

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Section: Empirical Results and Discussionsupporting

confidence: 92%

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2018

RIC

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“…The Keynesian hypothesis is rejected in the long and short-term for both real and nominal variables. Bayrak et al (2014) analyse the validity of the Wagner's law in 27 OECD countries between 1995 and 2012. The authors use the unit-root co-integration and error correction tests on a panel data.…”

Section: The Wagner's Law Testing: State Of the Artmentioning

confidence: 99%

The Wagner’s law testing in the Visegrád Four countries

Tesařová

2020

Review of Economic Perspectives

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This research paper analyses the relationship between gross domestic product and public expenditures in nominal terms. The analysis is being done by using the standard Peacock-Wiseman specification of the Wagner’s law and provides the results for the Visegrád Four countries, i.e. the Czech Republic, Slovakia, Poland and Hungary. We aim to answer a question concerning the existence of a long and/or short-term relationship between the nominal GDP and nominal public expenditures, which consist of current and capital expenditures. To address this question, we employ the VAR model, the Johansen Cointegration test and the VEC model. We study a period between the first quarter of 1999 and the second quarter of 2019 and find out mixed results for the Visegrád Four countries.

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“…The empirical evidence from this literature is however mixed and controversial across countries, data, model specifications and econometric techniques. While some studies (Ram, 1987;Ahsan et al, 1996;Cotsomitis et al, 1996;Thornton, 1999;Islam, 2001;Al-Faris, 2002;Chang, 2002;Aregbeyen, 2006;Srinivasan, 2013;Bayrak and Esen, 2014) found support for Wagner's Law, other studies (Ansari et al, 1997;Biswal et al, 1999;Ghali, 1999;Burney, 2002;Huang, 2006) reported results contradicting Wagner's law. Some other studies (Singh & Sahni, 1984;Ahsan et al, 1992;Afxentiou & Serletis, 1996;Sinha, 1998;Bagdigen & Cetintas, 2004;Dogan & Tang, 2006) showed no evidence for both propositions.…”

Section: Introductionmentioning

confidence: 99%

Threshold Cointegration, Asymmetric Causality and Wagner’s Law: The African Experience Revisited

Keho¹

2017

IJEF

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This study re-examines the Wagner's law of public expenditure for six sub-Saharan African countries while relaxing the assumption of a symmetric adjustment process underlying standard cointegration tests and error-correction models. The empirical methodology uses threshold cointegration tests to establish that there is a long-run relationship between government expenditure and per capita GDP for five countries, with income being positively related to public spending. Furthermore, the results of asymmetric Granger-causality tests provide support for Wagner's law in the long run for five countries (Cameroon, Cote d'Ivoire, Ghana, Kenya, and Senegal), while the Keynesian view holds only in the short run for three countries (Benin, Cameroon, and Cote d'Ivoire). The short run evidence for two countries (Kenya and Senegal) support both Wagner's law and Keynesian view.

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Examining the Validity of Wagner’s Law in the OECD Economies

Cited by 13 publications

References 29 publications

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The Wagner’s law testing in the Visegrád Four countries

Threshold Cointegration, Asymmetric Causality and Wagner’s Law: The African Experience Revisited

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