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Further Evidence on Public Spending and Economic Growth in East Asian Countries

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  • Kumar, Saten

Abstract

This article examines Wagner’s Law for East Asian countries (China, Hong Kong, Japan, Taiwan and South Korea) for the period 1960 to 2007. Using the Gregory and Hansen (1996a & b) structural break techniques, we find a cointegrating relationship between real government spending and real income. Our preferred Gregory and Hansen models are with the level shift for Hong Kong and Taiwan and regime shift (change in intercept and slope coefficients) for China, Japan and South Korea. The income elasticity of government spending ranges from 0.756 to 1.155. With these findings, we infer that Wagner’s Law does hold for these countries, except for Hong Kong where the income elasticity is not highly statistically significant.

Suggested Citation

  • Kumar, Saten, 2009. "Further Evidence on Public Spending and Economic Growth in East Asian Countries," MPRA Paper 19298, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:19298
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    References listed on IDEAS

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    Cited by:

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    2. Kotsyubinskiy, Vladimir A. (Коцюбинский, Владимир) & Komarov, Vladimir (Комаров, Владимир) & Voloshinskaya, Anna (Волошинская, Анна), 2017. "The Rank of the Largest Technology Companies in Russia [Рейтинг Крупнейших Технологических Компаний России]," Working Papers 021709, Russian Presidential Academy of National Economy and Public Administration.
    3. Ant�nio Afonso & João Tovar Jalles, 2014. "Causality for the government budget and economic growth," Applied Economics Letters, Taylor & Francis Journals, vol. 21(17), pages 1198-1201, November.
    4. Ant Afonso & João Tovar Jalles, 2014. "Fiscal composition and long-term growth," Applied Economics, Taylor & Francis Journals, vol. 46(3), pages 349-358, January.
    5. António Afonso & João Tovar Jalles, 2012. "The Fiscal-Growth Nexus," Working Papers Department of Economics 2012/01, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.

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    More about this item

    Keywords

    Real Government Spending; Real Income; Gregory and Hansen Structural Break Techniques.;
    All these keywords.

    JEL classification:

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

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