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Testing for structural changes in the Wagner’s Law for a sample of East Asian countries

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  • Saten Kumar

    (Auckland University of Technology)

  • Zhaoyi Cao

    (Auckland University of Technology)

Abstract

This paper examines the Wagner’s Law for a sample of East Asian countries (China, Hong Kong, Japan and South Korea) by utilizing the structural break methods viz., Gregory and Hansen (J Econom 70:99–126, 1996a; Oxf Bull Econ Stat 58:555–559, 1996b), Carrion-i-Silvestre and Sanso (Oxf Bull Econ Stat 68:623–646, 2006) and Bai and Perron (Econometrica 66:47–78, 1998; J Appl Econom 18:1–22, 2003). We find that there exists weak cointegrating relationship between the log of nominal public expenditure as a share of nominal GDP to the log of real per capita GDP. However, we find support for the Wagner’s Law when the relationship is extended to include a measure of the population structure—the dependency ratio. Our findings support the explanations suggested by Durevall and Henrekson (J Public Econ 95(7–8):708–722, 2011).

Suggested Citation

  • Saten Kumar & Zhaoyi Cao, 2020. "Testing for structural changes in the Wagner’s Law for a sample of East Asian countries," Empirical Economics, Springer, vol. 59(4), pages 1959-1976, October.
    • Handle: RePEc:spr:empeco:v:59:y:2020:i:4:d:10.1007_s00181-019-01686-5
    DOI: 10.1007/s00181-019-01686-5
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    More about this item

    Keywords

    Government spending; Dependency ratio; Cointegration; Structural breaks;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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