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Revisiting Wagner’s Law for Selected African Countries: A Frequency Domain Causality Analysis

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  • Yaya Keho

Abstract

This study examines the causal relationship between government expenditure and economic growth and tests the validity of Wagner’s Law for ten African countries. Wagner’s law hypothesizes that there is a one-way causality running from national income to government expenditure. We employ Granger causality tests in the frequency domain which allows us to distinguish short, medium and long run causality. The empirical results show that Wagner’s law holds for Cameroon only in the medium term, for Ghana in the short, medium and long terms and for Nigeria in the long-run. The opposite view is supported for Gabon and Senegal in the short, medium and long run, and for South Africa both in the medium and short run. There is bidirectional causality between government expenditure and income for Burkina Faso over the short, medium and long run.

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  • Yaya Keho, 2015. "Revisiting Wagner’s Law for Selected African Countries: A Frequency Domain Causality Analysis," Journal of Statistical and Econometric Methods, SCIENPRESS Ltd, vol. 4(4), pages 1-4.
    • Handle: RePEc:spt:stecon:v:4:y:2015:i:4:f:4_4_4
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    Cited by:

    1. Matteo Farnè & Angela Montanari, 2022. "A Bootstrap Method to Test Granger-Causality in the Frequency Domain," Computational Economics, Springer;Society for Computational Economics, vol. 59(3), pages 935-966, March.
    2. Mthokozisi Mlilo & Matamela Netshikulwe, 2017. "Re-testing Wagner's Law: Structural breaks and disaggregated data for South Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 9(4), pages 49-61.
    3. Mustapha JOBARTEH, 2020. "Testing Wagner’s Law for sub-Saharan Africa: A panel cointegration and causality approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(622), S), pages 125-136, Spring.
    4. Paul, Fintan & Furahisha, Godlove, 2017. "Government Expenditure and Economic Growth Nexus: Wagner’s law or Keynesian Hypothesis for Tanzania?," African Journal of Economic Review, African Journal of Economic Review, vol. 5(1), January.

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