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Why is public spending growing? Wagner's Law in the Argentine case

Author

Listed:
  • Juan Carro

    (Universidad de Buenos Aires)

Abstract

Why does public expenditure grow? Wagner´s law assumes that the increase in size of the public expenditure is a logical consequence of economic growth. Does Wagner´s law apply in the case of Argentina? In order to answer this question, the evolution of public expenditure between 1983 and 2018 is analyzed and a vector error correction model (VEC) is proposed. Based on this methodology, it is concluded that the increase in GDP has had an expansive effect on the size of public expenditure. Therefore, the suitability of the application of the Wagner´s law for the analyzed period is corroborated.

Suggested Citation

  • Juan Carro, 2021. "Why is public spending growing? Wagner's Law in the Argentine case," Revista de Economía Política de Buenos Aires, Universidad de Buenos Aires. Facultad de Ciencias Económicas., issue 22, pages 73-117, June.
    • Handle: RePEc:ake:repba1:y:2021:i:22:p:73-117
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    More about this item

    Keywords

    public expenditure; Wagner's law; vector error correction model;
    All these keywords.

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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