Discussion Paper, Turkish Economic Association 2005/15
This paper attempts to test Wagnerian and Keynesian hypotheses by examining the relationship between economic growth and total government expenditure as well as its various components, such as current, investment, and transfer expenditures for Turkey during the period 1950-2003. This study finds a unidirectional causality (except for total government expenditure) from economic growth to disaggregated public expenditure that total current, investment, transfer expenditures, non-transfer total public expenditures in the long run. Although the results of this study do not support the existence of any long run casual relationship between economic growth and total public expenditures, they do support the existence of long run relationship between economic growth and the disaggregated public expenditure variables. The result of this study provide evidence to support the proposition in the literature that causality runs from economic growth to disaggregated public expenditure called as Wagner hypothesis.
Wagnerian and Keynesian hypotheses dissagregated public expenditure growth causality co-integration error correction model