Testing Wagner's Law at Different Stages of Economic Development

Autor(en): Kuckuck, Jan
Stichwörter: Business & Economics; Business, Finance; COINTEGRATION; CROSS-SECTION; economic development; Economics; GOVERNMENT EXPENDITURE; GROWTH; HYPOTHESIS; NATIONAL-INCOME; PUBLIC-EXPENDITURE; SIZE; TIME-SERIES; UNIT-ROOT; VECM; Wagner's law
Erscheinungsdatum: 2014
Herausgeber: MOHR SIEBECK
Journal: FINANZARCHIV
Volumen: 70
Ausgabe: 1
Startseite: 128
Seitenende: 168
Zusammenfassung: 
Using historical data from the mid-19th century, we test the validity of Wagner's law of increasing state activity at different stages of economic development for five industrialized European countries: the United Kingdom, Denmark, Sweden, Finland, and Italy. In order to investigate the relation between Wagner's law and development stage, we classify every country into individual stages of income and apply advanced cointegration and vector error-correction analyses. In line with Wagner's hypothesis, our findings show that the relationship between public spending and economic growth has weakened at an advanced stage of development. Furthermore, all countries under review support the notion that Wagner's law may have lost its economic relevance in recent decades.
ISSN: 00152218
DOI: 10.1628/001522114X679183

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