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Government expenditure and economic growth: evidence from G7 countries

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  • Bharat Kolluri
  • Michael Panik
  • Mahmoud Wahab

Abstract

This paper examines Wagner's Law of Public Expenditure, which emphasizes economic growth as the fundamental determinant of public sector growth, using time series data drawn from the G7 industrialized countries over the sample period 1960 1993. It presents evidence on both the short- and long-run effects of growth in national income on government expenditure by resorting to recent developments in the theory of cointegrated processes. An attempt is also made in this study to examine if Wagner's Law holds between certain key components of government expenditure and income.

Suggested Citation

  • Bharat Kolluri & Michael Panik & Mahmoud Wahab, 2000. "Government expenditure and economic growth: evidence from G7 countries," Applied Economics, Taylor & Francis Journals, vol. 32(8), pages 1059-1068.
    • Handle: RePEc:taf:applec:v:32:y:2000:i:8:p:1059-1068
    DOI: 10.1080/000368400322110
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    References listed on IDEAS

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