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An Empirical Investigation of Wagner's Hypothesis by Using a Model Occurrence Framework

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  • Gary Koop
  • Dale J. Poirier

Abstract

Wagner's hypothesis asserts that as a country's level of development increases so does the relative size of its public sector. This study examines the empirical validity of Wagner's hypothesis. Based on data from 86 countries, the study employs a model occurrence framework to determine whether Wagner's hypothesis holds for the countries in which it is expected to. The results are discouraging for believers in Wagner's hypothesis. Indeed, Wagner's hypothesis is supported in only a third of the countries and its variable occurrence is not explained well in terms of a priori applicability conditions either in sample or out of sample.

Suggested Citation

  • Gary Koop & Dale J. Poirier, 1995. "An Empirical Investigation of Wagner's Hypothesis by Using a Model Occurrence Framework," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 158(1), pages 123-141, January.
    • Handle: RePEc:bla:jorssa:v:158:y:1995:i:1:p:123-141
    DOI: 10.2307/2983407
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    Cited by:

    1. Francisca Galindo-Garre & Jeroen K. Vermunt & Wicher P. Bergsma, 2004. "Bayesian Posterior Estimation of Logit Parameters with Small Samples," Sociological Methods & Research, , vol. 33(1), pages 88-117, August.
    2. Magazzino, Cosimo, 2009. "Wagner's law in Italy: empirical evidence from 1960 to 2008," MPRA Paper 25526, University Library of Munich, Germany.
    3. Samad Bashirli & Ilkin Sabiroglu, 2013. "Testing Wagner’s Law in an Oil-Exporting Economy: the Case of Azerbaijan," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 20(3), pages 295-307, November.
    4. Magazzino, Cosimo, 2010. "Wagner's law and Italian disaggregated public spending: some empirical evidences," MPRA Paper 26662, University Library of Munich, Germany.
    5. Magazzino, Cosimo, 2010. "Wagner's law and augmented Wagner's law in EU-27. A time-series analysis on stationarity, cointegration and causality," MPRA Paper 26668, University Library of Munich, Germany.

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