Testing Wagner's Law and Keynesian Hypothesis in Selected Post-Soviet Countries

Abbasov, Jeyhun; Aliyev, Khatai

doi:10.11118/actaun201866051227

Cited by 17 publications

(15 citation statements)

References 41 publications

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“…This is because Wagner's law is valid for EU member transition economies for the 1995-2019 period. Moreover, the results arising from this research are supported in the literature by Thornton (1999), Kolluri et al (2000), Al-Faris (2002), Wu et al (2010), Paparas and Stoian (2016), Abbasov and Aliyev (2018), Ağayev (2012).…”

Section: Dumitrescu and Hurlin (2012) Panel Granger Causality Testsupporting

confidence: 81%

“…Paparas and Stoian (2016) conducted a study on Romania and concluded that five versions of Wagner's law are valid. Abbasov and Aliyev (2018) studied nine former Soviet countries and concluded that Wagner's law is valid in Latvia, Lithuania, Uzbekistan, Georgia, Kyrgyzstan, and Ukraine, while Keynes's theory is valid in Estonia, Uzbekistan, Azerbaijan, Kyrgyzstan, and Moldova. Ağayev (2012) analyzed ten former Soviet countries and obtained results that support Wagner's law.…”

Section: Literature Reviewmentioning

confidence: 99%

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Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis

Demez¹

2021

jepr

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One of the main issues which has been given great emphasis in economics literature, particularly since the 19th century, is that of the relationship between public expenditure and economic growth. There are two theoretical approaches in the literature dealing with this relationship. The first is Wagner's law which states that public expenditure increases as growth expands. The second is related to the Keynesian hypothesis which states that public spending encourages growth. In other words, while Wagner asserts that the causality runs from growth to public spending, Keynes claims that public spending causes growth. In this study, the validity of Wagner's Law was analyzed with the Dumitrescu and Hurlin (2012) panel causality test using annual data from between the years 1995 and 2019 for eleven European Union member transition economies. Our main purpose in this study was to determine whether public expenditure can be used as an effective policy tool in transition economies that are members of the European Union. The test results revealed that there is one-way causality from growth to public spending. In other words, Wagner's Law is valid for the country group and period subject to the study.

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Section: Dumitrescu and Hurlin (2012) Panel Granger Causality Testsupporting

confidence: 81%

Section: Literature Reviewmentioning

confidence: 99%

Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis

Demez¹

2021

jepr

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“…They found that a 1% increase in government capital expenditures is associated with a 0.45%, 0.38% and 0.39% increase in real non-oil GDP by VECM, FMOLS and DOLS estimates, respectively. Besides that, Abbasov and Aliyev (2018) between total GDP and government expenditures in Azerbaijan. Abbasov (2012Abbasov ( , 2013 estimated the dependence of income per capita on the state budget expenditure items.…”

Section: Source: Own Compilationmentioning

confidence: 99%

Does the COVID19 pandemic change the relationship between government expenditures and economic growth in Azerbaijan?

Abbasov¹,

Gulaliyev²,

Ahmadov³

et al. 2021

Economics &Amp; Sociology

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This paper investigates the impact of the Government's capital and current expenditures on economic growth in Azerbaijan. The estimation strategy of the research consists of two directions. First, all estimation approaches were used for the period of 2005Q1-2019Q4. The estimated model for this period is called Model 1. Second, the model which is called Model 2 was estimated for whole period of 2005Q1-2021Q1. This approach allows comparing the role of the Government expenditures on non-oil economic activity in normal times and during the COVID-19 pandemic in Azerbaijan. Estimations show that coefficients characterizing the impact of Government current expenditures and capital expenditures on non-oil economic growth are almost the same for both periods. Therefore, we can state that COVID-19 pandemic did not affect the structure of the relationship between Government expenditures and non-oil economic growth. Results show that 1 percent increase in capital and current expenditures of state budget increases the real non-oil GDP by 0.10 and 0.40 percentage points, respectively. Accordingly, both capital and current expenditures of the state budget have positive impact on the real non-oil GDP growth for the both periods. This is in contrast to findings in the literature, which argue that increasing current expenditures financed by tax hikes lead to a lagged decrease in private investment, having an overall negative impact on economic growth. We attribute this opposing finding to the Azerbaijani state budget revenue system, which is financed by transfers from the State Oil Fund (Stabilization Fund). Thus, large government investment and social projects mostly rely on non-tax sources. Therefore, we argue that positive impact of capital and current expenditures of government budget on non-oil GDP seems plausible for Azerbaijan. Another result of our estimation is that expansion of economic openness accompanied by non-oil economic growth plunge in Azerbaijan. We interpret this phenomenon with very low share of non-oil export, where openness is mostly caused by increase in import volume.

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“…It should be noted that the ARDL method is more valuable than other cointegration approaches and offers reliable results for small samples (Abbasov and Aliyev, 2018).…”

Section: Ardlbtmentioning

confidence: 99%

The Impact of Azerbaijan's National Economic Development on Tourism Sector

Hajiyev

Humbatova²

2022

JEECAR

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This article the influence of GDP on travel vouchers in a long- and short-term perspective, travel vouchers sold to Azerbaijani citizens for long-term internal journeys, the price of travel vouchers sold to Azerbaijani citizens, the number of beds per person in a day, the number of beds per all citizens in a day, and the number of residential areas per citizens. In addition, it analyzes the impact of GNI on those same items. Unlike other research about the influence of tourism development on GDP, this article examines the reverse impact - the impact of GDP on tourism development. In Azerbaijan, the primary source of GDP growth is the export of energy resources. Tourism is not major contributor to economic development. The problem, therefore, is to find alternative ways to develop tourism based on the economic growth that comes from the export of energy resources. To explain this further, tourism development should rely on supply rather than the demand generated by GDP and GNI growth. As a result, GDP positively affects tourism development while GNI has a negative impact. We recommend considering the development of a stable supply for tourism that is not dependent on the revenues derived by energy exports.

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Testing Wagner's Law and Keynesian Hypothesis in Selected Post-Soviet Countries

Cited by 17 publications

References 41 publications

Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis

Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis

Does the COVID19 pandemic change the relationship between government expenditures and economic growth in Azerbaijan?

The Impact of Azerbaijan's National Economic Development on Tourism Sector

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