Wagner's Law and Augmented Wagner's Law in EU-27 - A Time-Series Analysis on Stationarity, Cointegration and Causality

Magazzino, C., (2012), Wagner’s Law and Augmented Wagner’s Law in EU-27. A Time-Series Analysis on Stationarity, Cointegration and Causality, International Research Journal of Finance and Economics, 89, April, 205-220

16 Pages Posted: 30 Sep 2013

See all articles by Cosimo Magazzino

Cosimo Magazzino

University of Rome III; Royal Economic Society; Italian Economic Association

Date Written: April 1, 2012

Abstract

The relationship between public expenditure and aggregate income has long been debated in economic literature. According to Wagner, expenditure is an endogenous factor or an outcome. On the other hand, Keynes considered public expenditure as an exogenous factor to be used as a policy instrument to influence growth. “Augmented” version of Wagner’s Law, where public deficit appears as further explanatory variable, is also investigated. The aim of this paper is to assess empirical evidence of these hypotheses in EU-27, for the period 1970-2009. After a brief introduction, a survey of the economic literature on this issue is offered, before evaluating some specifications of “Wagner’s Law” due to several researchers. Few notes on the empirical evidence’ comparisons conclude the paper.

Keywords: Wagner’s Law, public expenditure, EU-27, correlation, unit root tests, cointegration analysis, causality

JEL Classification: E60, H50, H60, N43

Suggested Citation

Magazzino, Cosimo, Wagner's Law and Augmented Wagner's Law in EU-27 - A Time-Series Analysis on Stationarity, Cointegration and Causality (April 1, 2012). Magazzino, C., (2012), Wagner’s Law and Augmented Wagner’s Law in EU-27. A Time-Series Analysis on Stationarity, Cointegration and Causality, International Research Journal of Finance and Economics, 89, April, 205-220, Available at SSRN: https://ssrn.com/abstract=2333429

Cosimo Magazzino (Contact Author)

University of Rome III ( email )

Via Ostiense 139
Rome, RM 00154
Italy

HOME PAGE: http://scienzepolitiche.uniroma3.it/cmagazzino/

Royal Economic Society ( email )

London
United Kingdom

Italian Economic Association ( email )

Piazzale Martelli, 8
Ancona, AN 60121
Italy

HOME PAGE: http://www.siecon.org/online/en/

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