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Wagner's Law in 19th Century Greece: A Cointegration and Causality Analysis

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  • Dimitrios Sideris

    (Bank of Greece and University of Ioannina)

Abstract

The validity of Wagner’s law, which states that the growth of public expenditure can be explained as a result of the increase in economic activity, is tested for Greece during the period 1833-1938. This represents a period of growth, industrialisation and modernisation of the economy, conditions which should be conducive to Wagner’s law. In addition, the long data sample ensures the reliability of the results in terms of economic significance and statistical inference. Cointegration analysis provides positive evidence for the existence of a long-run relationship between government expenditure and national income, and Granger causality tests indicate that causality runs from income to government expenditure. The results support Wagner’s hypothesis, in line with other empirical studies examining the validity of the hypothesis in 19th century economies.

Suggested Citation

  • Dimitrios Sideris, 2007. "Wagner's Law in 19th Century Greece: A Cointegration and Causality Analysis," Working Papers 64, Bank of Greece.
    • Handle: RePEc:bog:wpaper:64
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    References listed on IDEAS

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    More about this item

    Keywords

    Public expenditure; Wagner’s law; cointegration.;
    All these keywords.

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-

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