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Title:Some Second Thoughts on Wagner's Law PDF Logo
Authors:Dluhosch, Barbara
Zimmermann, Klaus W.
Issue Date:2006
Series/Report no.:Diskussionspapier / Helmut-Schmidt-Universität Hamburg, Fächergruppe Volkswirtschaftslehre 54
Abstract:We examine whether the Samuelsonian definition of public goods can be reconciled with "Wagner's Law", that is, public expenditures outpacing economic growth. While both predominantly focus on the demand-side, they differ with respect to their socio-political foundations. Taking the latter into account, and acknowledging that empirical studies are not generally supportive of individual income elasticities systematically differing between public and private goods, we find that Wagner's notion of the role of public-sector issues is even at odds with his own dictum. Implicit in Samuelson, by contrast, is the prediction that public spending decreases relative to GNP when income grows, provided that the income distribution remains constant. If this is not the case it can be shown that a growing inequality increases government's share et vice versa which can lead to counteractive forces on the GNP ratio.
Subjects:Wagner's Law
public expenditures
public goods
budget-to-GNP ratio
Persistent Identifier of the first edition:urn:nbn:de:gbv:705-opus-16836
Document Type:Working Paper
Appears in Collections:Diskussionspapiere, Fächergruppe VWL, Helmut-Schmidt-Universität

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