Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis
One of the main issues which has been given great emphasis in economics literature, particularly since the 19th century, is that of the relationship between public expenditure and economic growth. There are two theoretical approaches in the literature dealing with this relationship. The first is Wag...
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Istanbul University Press
2021-07-01
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| Series: | İktisat Politikası Araştırmaları Dergisi |
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| Online Access: | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/9F250EDCAC0C486CAC3B191E63FC7FA8 |
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| author | Selim Demez |
| author_facet | Selim Demez |
| author_sort | Selim Demez |
| collection | DOAJ |
| description | One of the main issues which has been given great emphasis in economics literature, particularly since the 19th century, is that of the relationship between public expenditure and economic growth. There are two theoretical approaches in the literature dealing with this relationship. The first is Wagner’s law which states that public expenditure increases as growth expands. The second is related to the Keynesian hypothesis which states that public spending encourages growth. In other words, while Wagner asserts that the causality runs from growth to public spending, Keynes claims that public spending causes growth. In this study, the validity of Wagner’s Law was analyzed with the Dumitrescu and Hurlin (2012) panel causality test using annual data from between the years 1995 and 2019 for eleven European Union member transition economies. Our main purpose in this study was to determine whether public expenditure can be used as an effective policy tool in transition economies that are members of the European Union. The test results revealed that there is one-way causality from growth to public spending. In other words, Wagner’s Law is valid for the country group and period subject to the study |
| format | Article |
| id | doaj-art-669fd26aee094e05b38c272422272745 |
| institution | Kabale University |
| issn | 2148-3876 |
| language | English |
| publishDate | 2021-07-01 |
| publisher | Istanbul University Press |
| record_format | Article |
| series | İktisat Politikası Araştırmaları Dergisi |
| spelling | doaj-art-669fd26aee094e05b38c2724222727452025-08-20T03:53:18ZengIstanbul University Pressİktisat Politikası Araştırmaları Dergisi2148-38762021-07-018219921010.26650/JEPR.910662123456Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality AnalysisSelim Demez0https://orcid.org/0000-0001-6885-0499Hakkari Üniversitesi, Hakkari, TurkiyeOne of the main issues which has been given great emphasis in economics literature, particularly since the 19th century, is that of the relationship between public expenditure and economic growth. There are two theoretical approaches in the literature dealing with this relationship. The first is Wagner’s law which states that public expenditure increases as growth expands. The second is related to the Keynesian hypothesis which states that public spending encourages growth. In other words, while Wagner asserts that the causality runs from growth to public spending, Keynes claims that public spending causes growth. In this study, the validity of Wagner’s Law was analyzed with the Dumitrescu and Hurlin (2012) panel causality test using annual data from between the years 1995 and 2019 for eleven European Union member transition economies. Our main purpose in this study was to determine whether public expenditure can be used as an effective policy tool in transition economies that are members of the European Union. The test results revealed that there is one-way causality from growth to public spending. In other words, Wagner’s Law is valid for the country group and period subject to the studyhttps://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/9F250EDCAC0C486CAC3B191E63FC7FA8transition economieswagner’s lawpublic expendituresgrowthpanel causality analysis |
| spellingShingle | Selim Demez Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis İktisat Politikası Araştırmaları Dergisi transition economies wagner’s law public expenditures growth panel causality analysis |
| title | Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis |
| title_full | Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis |
| title_fullStr | Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis |
| title_full_unstemmed | Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis |
| title_short | Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis |
| title_sort | validity of wagner s law in eu member transition economies panel causality analysis |
| topic | transition economies wagner’s law public expenditures growth panel causality analysis |
| url | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/9F250EDCAC0C486CAC3B191E63FC7FA8 |
| work_keys_str_mv | AT selimdemez validityofwagnerslawineumembertransitioneconomiespanelcausalityanalysis |