Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/23641 
Year of Publication: 
2006
Series/Report no.: 
Diskussionspapier No. 54
Publisher: 
Helmut-Schmidt-Universität - Universität der Bundeswehr Hamburg, Fächergruppe Volkswirtschaftslehre, Hamburg
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
JEL: 
H50
H41
H11
D11
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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