Government Expenditure And National Income: Causality Tests For Five South East Asian Countries

Abstract

This study aims to determine the direction of causality between national income and government expenditures for Indonesia, Malaysia, Philippines, Singapore, and Thailand. Granger causality tests are used to investigate the causal links between the two variables. Times series data covering last four decades are used. Support for the hypothesis that causality runs from government expenditures to national income has been found only in the case of Philippines. There is no evidence for this hypothesis and its reverse for the other countries.

Nigeria Economic Recess versus Wagner’s Law and Keynesian Proposition

“…They inferred that Wagner's Law hold for China, Japan, Taiwan and South Korean countries, but could not validate the law for Hong Kong. More also, Dogan and Tang [18] studied five Asian countries which include, Indonesia, Malaysia, Philippines, Singapore, and Thailand but only found support for Keynesian proposition for Philippines, while there is no evidence for either Wagner's law and Keynesian proposition for other four countries. Meanwhile, in earlier studies Chang [19] examined different versions of Wagner's law by employing annual time-series data on six countries over the period of 1951-1996.…”

Wagner's Law in Sri Lanka: An Econometric Analysis

“…Devarajan et al [15] also assessed the impact of different types of public expenditure on economic growth, but they did not find any significant relationship. Dogan [16] investigated the relationship between national income and public expenditures for Indonesia, Malaysia, Philippines, Singapore, and Thailand. Granger causality tests were used to investigate the causal links between the two variables.…”

Economic Development and Government Spending: An Exploration of Wagner’s Hypothesis during Fifty Years of Growth in East Asia

“…Similarly, Lamartina and Zaghini (2011) [7] and Magazzino (2012) [8] find support for the law using a panel data set on 23 OECD countries and the EU-27 countries, respectively. In contrast, lack of support for the law is reported by Babatunde (2011) [9] for Nigeria; by Wu and Lin (2012) [10] for Chinese provinces; and by Dogan and Tang (2006) [11] for five South East Asian economies. However, Narayan, et al [12] report mixed evidence in support of the law using data on Chinese provinces.…”