Wagner versus Keynes: Empirical evidence from Turkey’s provinces

Sağdıç, Ersin Nail; Şaşmaz, Mahmut Ünsal; Tuncer, Güner

doi:10.2298/pan170531001s

Cited by 16 publications

(8 citation statements)

References 32 publications

(29 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…As a result, the specification and estimation of the linear PMG model are reliable and precise. Hazarika and Nayak (2022), Sagdic, Sasmaz, and Tuncer (2020) and Narayan et al (2012), which supported the notion of a bidirectional relationship between public expenditure and economic growth, aligning with both Wagner's law and Keynes' hypothesis. However, the conclusions drawn from the research Rani and Kumar (2022) are consistent with the present study's findings, suggesting that for the Indian states examined, Wagner's law holds true while Keynesian hypothesis is rejected.…”

Section: Resultssupporting

confidence: 55%

An Empirical Investigation of Wagner's Law for Twelve Indian States: A Pooled Mean Group Approach Using Linear and Non-Linear Specifications

Choudhary,

Chary,

Singh

2023

Preprint

View full text Add to dashboard Cite

Wagner's Law, which is considered the first model of public spending in public finance history, suggests that there is a tendency for government spending to increase relative to national income over the long run. This study aims to empirically test the validity of Wagner's hypothesis for twelve Indian states grouped into high-debt and low-debt states, from 2002 to 2020 using a pooled mean group approach. The study also examines the short-run causality between government expenditure and per capita GDP using the Dumitrescu Hurlin Granger causality test. We found a long run relationship between state expenditure and per capita gross state domestic product. Furthermore, there appears to be a significant asymmetric effect of per capita GDP on the expenditure variables, for the entire sample. The study offers value to policy-makers in understanding expenditure dynamics of Indian states and the validity of Wagner’s law in low and high debt states.

show abstract

Section: Resultssupporting

confidence: 55%

An Empirical Investigation of Wagner's Law for Twelve Indian States: A Pooled Mean Group Approach Using Linear and Non-Linear Specifications

Choudhary,

Chary,

Singh

2023

Preprint

View full text Add to dashboard Cite

show abstract

“…Using Johansen's cointegration test and Granger's causality test for the period 1975-2014, Uzuner et al [53] confirm Wagner's law through the existence of a long-term relationship between public expenditures and economic growth in Turkey. Moreover, Sagdic et al [54] provide strong support not only for Wagner's law but also for Keynes' hypothesis in the case of the 81 provinces of Turkey. Focusing on health expenditure, Atilgan et al [55] concluded that there is a dynamic causal relationship between them and economic growth in Turkey.…”

Section: Literature Reviewmentioning

confidence: 91%

Government Spending and Economic Growth: A Cointegration Analysis on Romania

Popescu

Diaconu

2021

Sustainability

View full text Add to dashboard Cite

The purpose of our study is to identify the nature of the link between government spending and economic growth, in order to test the two theories of Wagner and Keynes, in the case of Romania. On the one hand, Keynes argues that public spending is an important tool to stimulate growth. On the other hand, Wagner says that increased public spending is a result of economic growth. We analyzed the long-term dynamics of the two time series through Johansen’s cointegration approach and, in the short term, with the help of Granger’s causality test. The obtained results do not indicate the existence of long-term cointegration vectors, but they support the double causality relation in the short term. Therefore, not only does GDP represent a Granger cause for government spending but also vice versa. Our results validate the liberal criticism of the state’s involvement in supporting economies. As the critics of the monetarist school said, the effect of multiplying government spending on national income is short-term. The long-term effect appears under the action of inflationary macroeconomic bottlenecks.

show abstract

“…Paparas et al [50] estimated a value of 1.19 for the long-run equilibrium elasticity in the UK (1850-2010). Using annual panel data for 81 provinces in Turkey (1992-2013), Sagdic et al [51] estimated a value of 0.58 for the long-run equilibrium elasticity. Peña [4] estimated the long-run equilibrium elasticity equal to 0.10 in Venezuela .…”

Section: Gupta and Michasmentioning

confidence: 99%

“…Considering the measures of government size and economic growth, according to Granger causality results with time series data or panel data, Magazzino [28], Barra et al [36], Irandoust [37], and Nyasha and Odhiambo [30] indicated the existence of four possible hypotheses: Wagner's law, in which unidirectional causality runs from economic growth to public expenditure [3,25,[38][39][40][41][42][43][44]; the Keynesian hypothesis, in which unidirectional causality runs from public expenditure to economic growth [4,45]; feedback hypothesis, in which a bidirectional causality flow exists between economic growth and public expenditure [33,[46][47][48][49][50][51]; and neutrality hypothesis, verified with variables that do not exhibit Granger causality in both directions [3,17,52].…”

Section: Introductionmentioning

confidence: 99%

Wagner’s Law vs. Keynesian Hypothesis: Dynamic Impacts

2022

View full text Add to dashboard Cite

This study analyzes the dynamics between public expenditure and economic growth in Peru for 1980Q1–2021Q4. We used quarterly time series of real GDP, public consumption expenditure, public expenditure, and the share of public expenditure to output. The variables were transformed into natural logarithms, wherein only the logarithm of public expenditure to output ratio is stationary and the others are non-stationary I1. The study of stationary time series assesses whether Wagner’s law, the Keynesian hypothesis, the feedback hypothesis, or the neutrality hypothesis is valid for the Peruvian case according to Granger causality. We found cointegration between real GDP and public expenditure, and public consumption expenditure and real GDP. Estimating error correction and autoregressive distributed lag models, we concluded that Wagner’s law and the Keynesian hypothesis are valid in the Peruvian case, expressed as dynamic processes that allow us to obtain short-run and long-run impacts, permitting the mutual sustainability of economic growth and public expenditure.

show abstract

Wagner versus Keynes: Empirical evidence from Turkey’s provinces

Cited by 16 publications

References 32 publications

An Empirical Investigation of Wagner's Law for Twelve Indian States: A Pooled Mean Group Approach Using Linear and Non-Linear Specifications

An Empirical Investigation of Wagner's Law for Twelve Indian States: A Pooled Mean Group Approach Using Linear and Non-Linear Specifications

Government Spending and Economic Growth: A Cointegration Analysis on Romania

Wagner’s Law vs. Keynesian Hypothesis: Dynamic Impacts

Contact Info

Product

Resources

About