Further Evidence on Public Spending and Economic Growth in East Asian Countries
AbstractThis article examines Wagner’s Law for East Asian countries (China, Hong Kong, Japan, Taiwan and South Korea) for the period 1960 to 2007. Using the Gregory and Hansen (1996a & b) structural break techniques, we find a cointegrating relationship between real government spending and real income. Our preferred Gregory and Hansen models are with the level shift for Hong Kong and Taiwan and regime shift (change in intercept and slope coefficients) for China, Japan and South Korea. The income elasticity of government spending ranges from 0.756 to 1.155. With these findings, we infer that Wagner’s Law does hold for these countries, except for Hong Kong where the income elasticity is not highly statistically significant.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 19298.
Date of creation: 20 Oct 2009
Date of revision:
Real Government Spending; Real Income; Gregory and Hansen Structural Break Techniques.;
Find related papers by JEL classification:
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-19 (All new papers)
- NEP-FDG-2009-12-19 (Financial Development & Growth)
- NEP-SEA-2009-12-19 (South East Asia)
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