IDEAS home Printed from https://ideas.repec.org/a/hur/ijaraf/v1y2011i1p1-17.html
   My bibliography  Save this article

Empirical Analysis of Wagner’s Law for the Spain’s Regions

Author

Listed:
  • Manuel Jaen-Garcia

    (University of Almería)

Abstract

In this paper a panel cointegration analysis is made of both overall development of government expenditure and economic growth in the seventeen Spanish regions (comunidades autónomas, in Spanish). Empirical evidence offers us a positive correlation between public expenditure and per capita GDP that is consistent with Wagner’s Law (WL). A long-run elasticity larger than one suggests a more than proportional increase in public expenditure with respect to economic activity. The principal contribution made by this paper is that, for the first time, empirical testing is carried out on WL, in both its static and dynamic forms, using the methods of unit roots and cointegration in panel data.

Suggested Citation

  • Manuel Jaen-Garcia, 2011. "Empirical Analysis of Wagner’s Law for the Spain’s Regions," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 1(1), pages 1-17, November.
    • Handle: RePEc:hur:ijaraf:v:1:y:2011:i:1:p:1-17
    as

    Download full text from publisher

    File URL: http://www.hrmars.com/admin/pics/498.pdf
    Download Restriction: no
    File URL: http://www.hrmars.com/admin/pics/498.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Norman Gemmell (ed.), 1993. "The Growth Of The Public Sector," Books, Edward Elgar Publishing, number 176.
    2. Tsangyao Chang & WenRong Liu & Steven Caudill, 2004. "A re-examination of Wagner's law for ten countries based on cointegration and error-correction modelling techniques," Applied Financial Economics, Taylor & Francis Journals, vol. 14(8), pages 577-589.
    3. Bagala Biswal & Urvashi Dhawan & Hooi-Yean Lee, 1999. "Testing Wagner versus Keynes using disaggregated public expenditure data for Canada," Applied Economics, Taylor & Francis Journals, vol. 31(10), pages 1283-1291.
    4. Serena Lamartina & Andrea Zaghini, 2011. "Increasing Public Expenditure: Wagner's Law in OECD Countries," German Economic Review, Verein für Socialpolitik, vol. 12(2), pages 149-164, May.
    5. Narayan, Paresh Kumar & Nielsen, Ingrid & Smyth, Russell, 2008. "Panel data, cointegration, causality and Wagner's law: Empirical evidence from Chinese provinces," China Economic Review, Elsevier, vol. 19(2), pages 297-307, June.
    6. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, January.
    7. Gemmell, Norman, 1990. "Wagner's Law, Relative Prices and the Size of the Public Sector," The Manchester School of Economic & Social Studies, University of Manchester, vol. 58(4), pages 361-377, December.
    8. Oxley, Les, 1994. "Cointegration, Causality and Wagner's Law: A Test for Britain 1870-1913," Scottish Journal of Political Economy, Scottish Economic Society, vol. 41(3), pages 286-298, August.
    9. Peacock, Alan & Scott, Alex, 2000. "The Curious Attraction of Wagner's Law," Public Choice, Springer, vol. 102(1-2), pages 1-17, January.
    10. Goffman, Irving J & Mahar, Dennis J, 1971. "The Growth of Public Expenditures in Selected Developing Nations: Six Caribbean Countries 1940-65," Public Finance = Finances publiques, , vol. 26(1), pages 57-74.
    11. Hondroyiannis, George & Papapetrou, Evangelia, 1995. "An Examination of Wagner's Law for Greece: A Cointegration Analysis," Public Finance = Finances publiques, , vol. 50(1), pages 67-79.
    12. Henning, John A & Tussing, A Dale, 1974. "Income Elasticity of the Demand for Public Expenditures in the United States," Public Finance = Finances publiques, , vol. 29(3-4), pages 325-341.
    13. Bird, Richard M, 1971. "Wagner's o Law' of Expanding State Activity," Public Finance = Finances publiques, , vol. 26(1), pages 1-26.
    14. Abizadeh, Sohrab & Yousefi, Mahmood, 1988. "An empirical re-examination of Wagner's law," Economics Letters, Elsevier, vol. 26(2), pages 169-173.
    15. Mahmoud Wahab, 2004. "Economic growth and government expenditure: evidence from a new test specification," Applied Economics, Taylor & Francis Journals, vol. 36(19), pages 2125-2135.
    16. Tsangyao Chang, 2002. "An econometric test of Wagner's law for six countries based on cointegration and error-correction modelling techniques," Applied Economics, Taylor & Francis Journals, vol. 34(9), pages 1157-1169.
    17. Nadeem Burney, 2002. "Wagner's hypothesis: evidence from Kuwait using cointegration tests," Applied Economics, Taylor & Francis Journals, vol. 34(1), pages 49-57.
    18. Henrekson, Magnus, 1993. "Wagner's Law--A Spurious Relationship?," Public Finance = Finances publiques, , vol. 48(3), pages 406-415.
    19. James Buchanan & Gordon Tullock, 1977. "The expanding public sector: Wagner squared," Public Choice, Springer, vol. 31(1), pages 147-150, September.
    20. Akitoby, Bernardin & Clements, Benedict & Gupta, Sanjeev & Inchauste, Gabriela, 2006. "Public spending, voracity, and Wagner's law in developing countries," European Journal of Political Economy, Elsevier, vol. 22(4), pages 908-924, December.
    21. Michas, Nicholas A, 1975. "Wagner's Law of Public Expenditures: What Is the Appropriate Measurement for a Valid Test?," Public Finance = Finances publiques, , vol. 30(1), pages 77-85.
    22. François Petry & Louis Imbeau & Jean Crête & Michel Clavet, 2000. "Explaining the Evolution of Government Size in the Canadian Provinces," Public Finance Review, , vol. 28(1), pages 26-47, January.
    23. Gandhi, Ved P, 1971. "Wagner's Law of Public Expenditure: Do Recent Cross-Section Studies Confirm it?," Public Finance = Finances publiques, , vol. 26(1), pages 44-56.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nupur Nirola & Sohini Sahu, 2020. "Revisiting the Wagner’s law for Indian States using second generation panel cointegration," Economic Change and Restructuring, Springer, vol. 53(2), pages 241-263, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Manuel Jaén-García, 2018. "Wagner’s Law: A Revision and a New Empirical Estimation," Hacienda Pública Española / Review of Public Economics, IEF, vol. 224(1), pages 13-35, March.
    2. Narayan, Paresh Kumar & Nielsen, Ingrid & Smyth, Russell, 2008. "Panel data, cointegration, causality and Wagner's law: Empirical evidence from Chinese provinces," China Economic Review, Elsevier, vol. 19(2), pages 297-307, June.
    3. Irandoust, Manuchehr, 2019. "Wagner on government spending and national income: A new look at an old relationship," Journal of Policy Modeling, Elsevier, vol. 41(4), pages 636-646.
    4. Philip Arestis & Hüseyin Şen & Ayşe Kaya, 2021. "On the linkage between government expenditure and output: empirics of the Keynesian view versus Wagner’s law," Economic Change and Restructuring, Springer, vol. 54(2), pages 265-303, May.
    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.
    6. Omoshoro-Jones, Oyeyinka Sunday, 2016. "A Cointegration and Causality Test on Government Expenditure –Economic Growth Nexus: Empirical Evidence from a South African Province," MPRA Paper 102085, University Library of Munich, Germany, revised 17 Oct 2017.
    7. Dimitrios Paparas & Christian Richter & Ioannis Kostakis, 2019. "The validity of Wagner’s Law in the United Kingdom during the Last Two Centuries," International Economics and Economic Policy, Springer, vol. 16(2), pages 269-291, April.
    8. Marco Gallegati & Massimo Tamberi, 2022. "Long swings in the growth of government expenditure: an international historical perspective," Public Choice, Springer, vol. 192(3), pages 227-248, September.
    9. Stephen Moore, 2016. "Wagner in Ireland: An Econometric Analysis," The Economic and Social Review, Economic and Social Studies, vol. 47(1), pages 69-103.
    10. Ebaid Ali & Bahari Zakaria, 2019. "The Nexus between Government Expenditure and Economic Growth: Evidence of the Wagner’s Law in Kuwait," Review of Middle East Economics and Finance, De Gruyter, vol. 15(1), pages 1-9, April.
    11. Burak Sencer Atasoy & Timur Han Gür, 2016. "Does the Wagner’s Hypothesis Hold for China? Evidence from Static and Dynamic Analyses," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 63(1), pages 45-60, March.
    12. E. Chuke Nwude & Tarila Boloupremo, 2018. "Public Expenditure and National Income: Time Series Evidence from Nigeria," International Journal of Economics and Financial Issues, Econjournals, vol. 8(1), pages 71-76.
    13. Christian Richter & Dimitrios Paparas, 2012. "The validity of Wagner’s Law in Greece during the last 2 centuries," Working Papers 2012.2, International Network for Economic Research - INFER.
    14. Nayak, Dinesh Kumar & Hazarika, Bhabesh, 2022. "Linkage between Income and Government Expenditure at Indian Sub-nationals: A Second Generation Panel Co-integration Techniques," Working Papers 22/374, National Institute of Public Finance and Policy.
    15. Ciro Bazán & Víctor Josué Álvarez-Quiroz & Yennyfer Morales Olivares, 2022. "Wagner’s Law vs. Keynesian Hypothesis: Dynamic Impacts," Sustainability, MDPI, vol. 14(16), pages 1-25, August.
    16. Dimitrios Sideris, 2007. "Wagner's Law in 19th Century Greece: A Cointegration and Causality Analysis," Working Papers 64, Bank of Greece.
    17. Cosimo Magazzino, 2012. "The Nexus between Disaggregated Public Spending and GDP in the Euro Area," Economics Bulletin, AccessEcon, vol. 32(3), pages 2560-2579.
    18. Thabane, Kanono & Lebina, Sello, 2016. "Economic Growth and Government Spending Nexus: Empirical Evidence from Lesotho," African Journal of Economic Review, African Journal of Economic Review, vol. 4(1), January.
    19. Durevall, Dick & Henrekson, Magnus, 2011. "The futile quest for a grand explanation of long-run government expenditure," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 708-722, August.
    20. Alfonso Arpaia & Alessandro Turrini, 2008. "Government expenditure and economic growth in the EU: long-run tendencies and short-term adjustment," European Economy - Economic Papers 2008 - 2015 300, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

    More about this item

    Keywords

    Wagner law; public expenditure; cointegration; panel data;
    All these keywords.

    JEL classification:

    • H00 - Public Economics - - General - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hur:ijaraf:v:1:y:2011:i:1:p:1-17. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hassan Danial Aslam (email available below). General contact details of provider: http://hrmars.com/index.php/pages/detail/Accounting-Finance-Journal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.