nach oben

Economic Change and Restructuring

Erschienen in:

25.06.2020

On the linkage between government expenditure and output: empirics of the Keynesian view versus Wagner’s law

verfasst von: Philip Arestis, Hüseyin Şen, Ayşe Kaya

Erschienen in: Economic Change and Restructuring | Ausgabe 2/2021

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

Using disaggregated data based on the classification of functions of government (COFOG), this study seeks to verify the Keynesian view versus Wagner’s law on the relationship between government expenditure and output, considering Turkey as a case study. To do so, the study attempts to capture the nature of the causal relationship between the two variables by applying linear and nonlinear Granger-causality tests. Rather than Wagner’s law, the empirical findings of the study provide supportive evidence for the Keynesian view, subject to the economically meaningful components of government expenditures considered. Overall, the empirical findings show that government expenditures on defense, economic affairs, education, health, housing and community amenities, and social protection positively affect output that comes out through fiscal multiplier and investment-accelerator mechanisms proposed by John Maynard Keynes.

Nächster Artikel The relationship between tax revenue, government expenditure, and economic growth in G7 countries: new evidence from time and frequency domain approaches

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Nur mit Berechtigung zugänglich

According to COFOG, the first-level categories are as follows: (01) general public services; (02) defense; (03) public order and safety; (04) economic affairs; (05) environmental protection; (06) housing and community amenities; (07) health; (08) recreation, culture and religion; (09) education; (10) social protection (see, OECD 2017). In addition to this, we should note that when we arrange our sample data in accordance with COFOG, we follow Afonso and Alves’s (2017) style.

Abizadeh S, Yousefi M (1988) An empirical re-examination of Wagner’s law. Econ Lett 26(2):169–173

Afonso A, Alves J (2017) Reconsidering Wagner’s law: evidence from the functions of the government. Appl Econ Lett 24(5):346–350

Afonso A, Furceri D (2010) Government size, composition, volatility, and economic growth. Eur J Polit Econ 26(4):517–532

Afonso A, Jalles JT (2014) Causality for the government budget and economic growth. Appl Econ Lett 21(17):1198–1201

Akitoby B, Clements B, Gupta S, Inchauste G (2006) Public spending, voracity, and Wagner’s law in developing countries. Eur J Polit Econ 22(4):908–924

Al-Faris AF (2002) Public expenditure and economic growth in the Gulf Cooperation Council countries. Appl Econ 34(9):1187–1193

Ansari MI, Gordon DV, Akuamoah C (1997) Keynes versus Wagner: public expenditure and national income for three African countries. Appl Econ 29(4):543–550

Antonis A, Constantinos K, Persefoni T (2013) Wagner’s law versus Keynesian hypothesis: evidence from pre-WWII Greece. Panoeconomicus 60(4):457–472

Anwar MS, Davies S, Sampath RK (1996) Causality between government expenditures and economic growth: an examination using co-integration techniques. Public Finance/Finances Publiques 51(2):166–184

Babatunde MA (2011) A bound testing analysis of Wagner’s law in Nigeria: 1970–2006. Appl Econ 43(21):2843–2850

Baek E, Brock W (1992) A general test for non-linear Granger causality: bivariate model, Iowa State University and University of Wisconsin, Madison Working Paper

Bairam EI (1992) Variable elasticity and Wagner’s law. Public Finance/Finances Publiques 47(3):491–495

Bairam EI (1995) Level of aggregation, variable elasticity Wagner’s law. Econ Lett 48:341–344

Barra C, Bimonte G, Spennati P (2015) Did fiscal institutions affect Wagner’s law in Italy during 1951–2009 period? An empirical analysis. Appl Econ 47(59):6409–6424

Barro RJ (1991) Economic growth in a cross-section of countries. Q J Econ 106(2):407–443

Barro RJ, Lee JW (1993) International comparisons of educational attainment. J Monet Econ 32(3):363–394

Bird RM (1971) Wagner’s law’ of expanding state activity. Public Finance/Finances Publiques 26(1):1–26

Biswal B, Dhawan U, Lee HY (1999) Testing Wagner versus Keynes using disaggregated public expenditure data for Canada. Appl Econ 31(10):1283–1291

Bloom DE, Canning D, Sevilla J (2004) The effect of health on economic growth: a production function approach. World Dev 32(1):1–13

Bose N, Haque ME, Osborn DR (2007) Public expenditure and economic growth: a disaggregated analysis from developing countries. Manchester Sch 75(5):533–556

Broock WA, Scheinkman JA, Dechert WD, LeBaron B (1996) A test for independence based on the correlations dimension. Econom Rev 15(3):197–235

Burney NA (2002) Wagner’s hypothesis: evidence from Kuwait using cointegration tests. Appl Econ 34(1):49–57

Cashin P (1995) Government spending, taxes and economic growth. IMF Staff Pap 42(2):237–269

Castles FG, Dowrick S (1990) The ımpact of government spending levels on medium-term economic growth in the OECD, 1960–85. J Theor Polit 2:173–204

Cavicchioli M, Pistoresi B (2016) Testing threshold cointegration in Wagner’s law: the role of military spending. Econ Model 59:23–31

Chang T (2002) An econometric test of Wagner’s law for six countries based on cointegration and error-correction modelling techniques. Appl Econ 34(9):1157–1169

Chang T, Liu W, Caudill SB (2004) A re-examination of Wagner’s law for ten countries based on cointegration and error-correction modelling techniques. Appl Financ Econ 14(8):577–589

Cheng S, Lai TW (1997) Government expenditures and economic growth in South Korea: a VAR approach. J Econ Dev 22(1):11–24

Chilas JG (2001) Does Wagner’s law really apply to Greece? J Stat Manage Syst 4(3):275–293

Chletsos M, Kollias C (1995) The demand for Turkish military expenditure 1960–1992. Cyprus J Econ 8(1):64–74

Chletsos M, Kollias C (1997) Testing Wagner’s law using disaggregated public expenditure data in the case of Greece: 1958–93. Appl Econ 29(3):371–377

Chow YF, Cotsomitis CA, Kwan ACC (2002) Multivariate cointegration and causality tests of Wagner’s hypothesis: evidence from the UK. Appl Econ 34(13):1671–1677

Courakis AS, Moura-Roque F, Tridimas G (1993) Public expenditure growth in Greece and Portugal: Wagner’s Law and beyond. Appl Econ 25(1):125–134

Demirbas S (1999) Co-integration analysis-causality testing and Wagner’s law: the case of Turkey, 950–1990, Discussion papers in Economics, Department of Economics, University of Leicester, Leicester

Denker M, Keller G (1983) On U-statistics and Von-Mises’ statistics for weakly dependent processes. Z Wahrscheinlichkeit 64(4):505–522

Devarajan S, Swaroop V, Zou H (1996) The composition of public expenditure and economic growth. J Monet Econ 37(2):313–344

Dickey DA, Fuller WA (1979) Distribution of the estimators for autoregressive time series with a unit root. J Am Stat Assoc 74(366):427–431

Diks CGH, Panchenko V (2005) A note on the Hiemstra-Jones test for Granger non-causality. Stud Nonlinear Dyn Econom 9(2):1558–3708

Diks CGH, Panchenko V (2006) A new statistic and practical guidelines for nonparametric Granger causality testing. J Econ Dyn Control 30(9–10):1647–1669

Dunne JP, Smith RP, Willenbockel D (2005) Models of military expenditure and growth: a critical review. Def Peace Econ 16(6):449–461

Durevall D, Henrekson M (2011) The futile quest for a grand explanation of long-run government expenditure. J Public Econ 95:708–722

Engle RF, Granger CWJ (1987) Cointegration and error correction representation: estimation and testing. Econometrica 55(2):251–276

Facchini F, Melki M (2013) Efficient government size: France in the 20th century. Eur J Polit Econ 31:1–14

Fölster S, Henrekson M (2001) Growth effects of government expenditure and taxation in rich countries. Eur Econ Rev 45(8):1501–1520

Funashima Y (2017) Wagner’s law versus displacement effect. Appl Econ 49(7):619–634

Funashima Y, Hiraga K (2017) Wagner’s law, fiscal discipline, and intergovernmental transfer: empirical evidence at the US and German state levels. Int Tax Public Finance 24(4):652–677

Gemmell N (1996) Evaluating the impacts of human capital stocks and accumulation on economic growth: some new evidence. Oxford Bull Econ Stat 58(1):9–28

Ghate C, Zak PJ (2002) Growth of government and the politics of fiscal policy. Struct Change Econ Dyn 13:435–455

Ghose A, Das S (2013) Government size and economic growth in emerging market economies: a panel co-integration approach. Macroecon Finance Emerg Mark Econ 6(1):14–38

Goffman IJ (1968) On the empirical testing of Wagner’s law: a technical note. Public Finance/Finances Publiques 23:359–364

Goffman IJ, Mahar DJ (1971) The growth of public expenditures in selected developing nations: six Caribbean countries 1940–65. Public Finance/Finances Publiques 26:57–74

Govindaraju CVGR, Rao R, Anwar S (2011) Economic growth and government spending in Malaysia: a re-examination of Wagner and Keynesian views. Econ Change Restruct 44(3):203–219

Granger CWJ (1969) Investigating causal relations by econometric models and cross spectral methods. Econometrica 37(3):424–438

Granger CWJ (1986) Developments in the study of cointegrated economic variables. Oxford Bull Econ Stat 48(3):213–228

Grossman PJ (1990) Government and growth: cross-sectional evidence. Public Choice 65:217–227

Gupta SP (1967) Public expenditure and economic growth: a time series analysis. Public Finance/Finances Publiques 22:423–466

Gyimah-Brempong K, Wilson M (2004) Health, human capital, and economic growth in sub-Saharan African and OECD countries. Q Rev Econ Finance 44(2):296–320

Gyles AF (1991) A time-domain transfer function model of Wagner’s law: the case of the United Kingdom economy. Appl Econ 23:327–330

Halıcıoğlu F (2003) Testing Wagner’s law for Turkey, 1960–2000. Rev Middle East Econ Finance 1(2):129–140

Henrekson M (1988) Swedish government growth: a disequilibrium analysis. Contrib Econ Anal 171:93–132

Henrekson M (1993) Wagner’s law-a spurious relationship. Public Finance/Finances Publiques 48(2):406–415

Hiemstra C, Jones JD (1994) Testing for linear and non-linear Granger causality in the stock price-volume relation. J Finance 49(5):1639–1664

Hiemstra C, Kramer C (1997) Nonlinearity and endogeneity in macro-asset pricing. Stud Nonlinear Dyn Econom 2(3):61–76

Holmes JM, Hutton PA (1990) On the causal relationship between government expenditures and national income. Rev Econ Stat 72(1):87–95

Hondroyiannis G, Papapetrou E (1995) An explanation of Wagner’s law for Greece: a cointegration analysis. Public Finance/Finances Publiques 50:67–79

Huang CJ (2006) Government expenditures in china and Taiwan: do they follow Wagner’s law? J Econ Dev 31(2):139–148

Iniguez-Montiel AJ (2010) Government expenditure and national income in Mexico: Keynes versus Wagner. Appl Econ Lett 17(9):887–893

Irandoust M (2019) Wagner on government spending and national income: a new look at an old relationship. J Policy Model 41:636–646

Islam AM (2001) Wagner’s law revisited: cointegration and exogeneity tests for the USA. Appl Econ Lett 8(8):509–515

Jaén-García M (2018) Wagner’s law: a revision and a new empirical estimation. Hacienda Pública Española/Rev Public Econ 224(1):13–35

Jalles J (2019) Wagner’s law and governments’ functions: granularity matters. J Econ Stud 46:446–466

Johansen S (1995) Likelihood-based inference in cointegrated vector autoregressive models. Oxford University Press, Oxford

Karceski SM, Kiser E (2020) Is there a limit to the size of the state? The scope conditions of Wagner’s law. J Inst Econ 16(2):217–232

Kaur K, Afifa U (2017) Testing Wagner’s Law in India: cointegration and causality analysis. Commun Stat Theory Methods 46(17):8510–8520

Keynes JM (1936) The general theory of interest, employment and money. Macmillan, London

Kolluri B, Wahab M (2007) Asymmetries in the conditional relation of government expenditure and economic growth. Appl Econ 39(18):2303–2322

Kolluri BR, Panik MJ, Wahab MS (2000) Government expenditure and economic growth: evidence from G7 countries. Appl Econ 32(8):1059–1068

Kónya L, Abdullaev B (2018) An attempt to restore Wagner’s law of increasing state activity. Empir Econ 55(4):1569–1583

Kuckuck J (2014) Testing Wagner’s law at different stages of economic development. FinanzArchiv 70:128–168

Kumar S, Cao Z (2019) Testing for structural changes in the Wagner’s law for a sample of east Asian countries. Empir Econ (forthcoming)

Kumar S, Webber DJ, Fargher S (2012) Wagner’s law revisited: cointegration and causality tests for New Zealand. Appl Econ 44(5):607–616

Kwiatkowski D, Phillips PCB, Schmidt P, Shin Y (1992) Testing the null hypothesis of stationarity against the alternative of a unit root. J Econom 54(1–3):159–178

Lamartina S, Zaghini A (2011) Increasing public expenditure: Wagner’s law in OECD countries. Ger Econ Rev 12:149–164

Landau D (1983) Government expenditure and economic growth: a cross-country study. South Econ J 49(3):783–792

Loizides J, Vamvoukas G (2005) Government expenditure and economic growth: evidence from trivariate causality testing. J Appl Econ 8(1):125–152

Magazzino C (2012) Wagner versus Keynes: public spending and national income in Italy. J Policy Model 34:890–905

Mann AJ (1980) Wagner’s law: an econometric test for Mexico, 1925–1976. Natl Tax J 33(2):189–201

Michas NA (1975) Wagner’s law of public expenditures: what is the appropriate measurement for a valid test. Public Finance/Finances Publiques 30:77–85

Mintz A, Huang C (1990) Defense expenditures, economic growth, and the ‘peace dividend’. Am Polit Sci Rev 84:1283–1293

Mohammadi H, Ram R (2015) Economic development and government spending: an exploration of Wagner’s hypothesis during fifty years of growth in East Asia. Economies 3(4):150–160

Murthy VNR (1993) Further evidence of Wagner’s law for Mexico: an application of co-integration analysis. Public Finance/Finances Publiques 48(1):92–96

Musgrave R (1969) Fiscal systems. Yale University Press, New Haven

Ng S, Perron P (2001) Lag length selection and the construction of unit root tests with good size and power. Econometrica 69(6):1519–1554

Nirola N, Sahu S (2020) Revisiting the Wagner’s law for Indian states using second generation panel cointegration. Econ Change Restruct 53:241–263

Odhiambo NM (2015) Government expenditure and economic growth in South Africa: an empirical investigation. Atl Econ J 43(3):393–406

OECD (2017) “Classification of the Functions of Government (COFOG)”, in Government at a Glance 2017. OECD Publishing, Paris

Oxley L (1994) Cointegration, causality and Wagner’s law: a test for Britain 1870–1913. Scott J Polit Econ 41:286–298

Paparas D, Richter C, Kostakis I (2018) The validity of Wagner’s law in the United Kingdom during the last two centuries. IEEP 16:269–291

Peacock A, Scott A (2000) The curious attraction of Wagner’s law. Public Choice 102:1–17

Peacock A, Wiseman J (1961) The growth of public expenditure in the United Kingdom. Princeton University Press, Princeton

Péguin-Feissolle A, Strikholm B, Teräsvirta T (2008) Testing the Granger Noncausality hypothesis in stationary nonlinear models of unknown functional form, CREATES Research Paper, No: 2008–19; the University of Aarhus, School of Economics and Management, Denmark

Perotti R (1992) Fiscal policy, income distribution, and growth, Working Paper, No: 636, Columbia University, New York

Perotti R (1994) Income distribution and investment. Eur Econ Rev 38:827–835

Phillips PCB, Perron P (1988) Testing for a unit root in time series regression. Biometrika 75(2):335–346

Pistoresi B, Rinaldi A, Salsano F (2017) Government spending and its components in Italy, 1862–2009: drivers and policy implications. J Policy Model 39(6):1117–1140

Pryor FL (1968) Public expenditures in communist and capitalist nations. George Allen and Unwin, London

Ram R (1986) Government size and economic growth: a new framework and some evidence from cross-section and time-series data. Am Econ Rev 76(1):191–203

Ram R (1987) Wagner’s hypothesis in time-series and cross-section perspectives: evidence from “real” data for 115 countries. Rev Econ Stat 69(2):194–204

Romer PM (1989) Human capital and growth: theory and evidence, NBER Working Paper, No: 3137, National Bureau of Economic Research, Cambridge

Sala-i-Martin X, Doppelhofer G, Miller RI (2004) Determinants of long-term growth: a Bayesian averaging of classical estimates (BACE) approach. Am Econ Rev 94(4):813–835

Samudram M, Nair M, Vaithilingam S (2009) Keynes and Wagner on government expenditures and economic development: the case of a developing economy. Empir Econ 36:697–712

Singh B, Sahni BS (1984) Causality between public expenditure and national income. Rev Econ Stat 66(4):630–644

Thornton J (1999) Cointegration, causality and Wagner’s Law in 19th century Europe. Appl Econ Lett 6(7):413–416

Wagner A (1883) Finanzwissenschuft, 3rd edn. Leipzig, C. F. Winter

Wagner A (1893) Grundlegung der Politischen Okonomie, 3rd edn. C. F. Winter, Leipzig

Wagner RE, Weber WE (1977) Wagner’s law, fiscal institutions, and the growth of government. Natl Tax J 30(1):59–68

Wahab M (2004) Economic growth and government expenditure: evidence from a new test specification. Appl Econ 36(19):2125–2135

Ward MD, Davis DR (1992) Sizing up the peace dividend: economic growth and military spending in the United States, 1948–1996. Am Polit Sci Rev 86(3):748–755

Weil DN (2007) Accounting for the effect of health on economic growth. Q J Econ 122(3):1265–1305

Wijeweera A, Webb MJ (2009) Military spending and economic growth in Sri Lanka: a time series analysis. Def Peace Econ 20(6):499–508

Wu SY, Tang JH, Lin E (2010) The impact of government expenditure on economic growth: how sensitive to the level of development? J Policy Model 32(6):804–817

Zivot E, Andrews D (1992) Further evidence on the great crash, the oil-price shock, and the unit root hypothesis. J Bus Econ Stat 10(3):251–270

Titel: On the linkage between government expenditure and output: empirics of the Keynesian view versus Wagner’s law
verfasst von: Philip Arestis
Hüseyin Şen
Ayşe Kaya
Publikationsdatum: 25.06.2020
Verlag: Springer US
Erschienen in: Economic Change and Restructuring / Ausgabe 2/2021
Print ISSN: 1573-9414
Elektronische ISSN: 1574-0277
DOI: https://doi.org/10.1007/s10644-020-09284-7

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 2/2021

Technology, energy use, and agricultural value addition nexus: an exploratory analysis from SSA countries

Wealth distribution and accounting for changes in wealth inequality: empirical evidence from India, 1991–2012

Vertical structure, capital misallocation and capital allocation efficiency of the real economy

Do governance quality and ICT infrastructure influence the tax revenue mobilisation? An empirical analysis for India

Financial development and real sector in sub-Saharan Africa

The asymmetric effect of trade openness on economic growth in South Africa: a nonlinear ARDL approach

Premium Partner