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Title:Testing Wagner's law at different stages of economic development: A historical analysis of five Western European countries PDF Logo
Authors:Kuckuck, Jan
Issue Date:2012
Series/Report no.:Working Paper, Institute of Empirical Economic Research, University of Osnabrück 91
Abstract:Using historical data, 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 coherence between Wagner's law and development stage, we classify every country into three individual stages of income development 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 with an advanced stage of development. All countries support the notion that Wagner's law in its pure form may have reached its limit in recent decades.
Subjects:Wagner's law
government expenditure
economic development
cointegration
structural breaks
VECM
JEL:E62
H5
N43
N44
Document Type:Working Paper
Appears in Collections:Working Papers, Institut für Empirische Wirtschaftsforschung, Universität Osnabrück

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