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Keynes versus Wagner: public expenditure and national income for three African countries

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  • M. I. Ansari
  • D. V. Gordon
  • C. Akuamoah
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    Abstract

    The public expenditure/income hypothesis has long been debated in economics. Following Keynes, public expenditure is seen as an exogenous factor to be used as a policy instrument to influence growth. On the other hand, Wagner argues that expenditure is an endogenous factor or an outcome, not a cause, of growth in national income. The purpose of this paper is to apply both the Granger and Holmes-Hutton statistical procedures to test the income-expenditure hypothesis for three African countries-Ghana, Kenya and South Africa. We find that the hypothesis of public expenditure causing national income is not supported by the data for these African countries.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Economics.

    Volume (Year): 29 (1997)
    Issue (Month): 4 ()
    Pages: 543-550

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    Handle: RePEc:taf:applec:v:29:y:1997:i:4:p:543-550

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    Cited by:
    1. James Alm & Abel Embaye, 2010. "Explaining The Growth Of Government Spending In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 78(2), pages 152-169, 06.
    2. Muthi Samudram & Mahendhiran Nair & Santha Vaithilingam, 2009. "Keynes and Wagner on government expenditures and economic development: the case of a developing economy," Empirical Economics, Springer, vol. 36(3), pages 697-712, June.
    3. Cosimo Magazzino, 2012. "The Nexus between Disaggregated Public Spending and GDP in the Euro Area," Economics Bulletin, AccessEcon, vol. 32(3), pages 2560-2579.
    4. Benin, Samuel & Mogues, Tewodaj & Cudjoe, Godsway & Randriamamonjy, Josee, 2009. "Public expenditures and agricultural productivity growth in Ghana," 2009 Conference, August 16-22, 2009, Beijing, China 51634, International Association of Agricultural Economists.
    5. Chaido Dritsaki & Melina Dritsaki, 2010. "Government Expenditure and National Income: Causality Tests for Twelve New Members of E.E," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 13(38), pages 67-89, December.
    6. V. Chandran Govindaraju & Ramesh Rao & Sajid Anwar, 2011. "Economic growth and government spending in Malaysia: a re-examination of Wagner and Keynesian views," Economic Change and Restructuring, Springer, vol. 44(3), pages 203-219, August.
    7. Narayan, Seema & Rath, Badri Narayan & Narayan, Paresh Kumar, 2012. "Evidence of Wagner's law from Indian states," Economic Modelling, Elsevier, vol. 29(5), pages 1548-1557.
    8. Saten Kumar & Don J. Webber & Scott Fargher, 2009. "Wagner’s Law Revisited: Cointegration and Causality tests for New Zealand," Working Papers 0917, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    9. Bağdigen, Muhlis & Çetintaş, Hakan, 2003. "Causality between Public Expenditure and Economic Growth: The Turkish Case," MPRA Paper 8576, University Library of Munich, Germany, revised 07 Dec 2003.
    10. Tang, Chor Foon & Lean, Hooi Hooi, 2009. "New evidence from the misery index in the crime function," Economics Letters, Elsevier, vol. 102(2), pages 112-115, February.
    11. Paresh Kumar Narayan & Ingrid Nielsen & Russell Smyth, 2006. "Panel Data, Cointegration, Causality And Wagner'S Law: Empirical Evidence From Chinese Provinces," Monash Economics Working Papers 01/06, Monash University, Department of Economics.
    12. Magazzino, Cosimo, 2010. "Wagner's law and Italian disaggregated public spending: some empirical evidences," MPRA Paper 26662, University Library of Munich, Germany.
    13. Tsangyao Chang & WenRong Liu & Steven Caudill, 2004. "A re-examination of Wagner's law for ten countries based on cointegration and error-correction modelling techniques," Applied Financial Economics, Taylor & Francis Journals, vol. 14(8), pages 577-589.
    14. Kumar, Saten, 2009. "Further Evidence on Public Spending and Economic Growth in East Asian Countries," MPRA Paper 19298, University Library of Munich, Germany.
    15. Korhan Gokmenoglu, 2013. "Re-Examination Of Wagner’S Law For Oecd Countries," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 28-37, February.
    16. Tang, Chor Foon, 2009. "Does causality technique matter to savings-growth nexus in Malaysia?," MPRA Paper 38535, University Library of Munich, Germany.
    17. Magazzino, Cosimo, 2012. "Wagner versus Keynes: Public spending and national income in Italy," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 890-905.
    18. Rajaraman, Indira & Mukhopadhyaya, Hiranya & Rao, Kavita R., 2001. "Time-series properties of state-level public expenditure," Working Papers 02/4, National Institute of Public Finance and Policy.
    19. Kojo Menyah & Yemane Wolde-Rufael, 2012. "Wagner'S Law Revisited: A Note From South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 80(2), pages 200-208, 06.

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