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Cointegration, Causality and Wagner's Law: A Test for Britain 1870-1913

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  • Oxley, Les

Abstract

Wagner's law, first proposed in 1883, has been tested on numerous occasions for many countries. The evidence presented to date on the existence of 'the law' has been mixed and interpretation have been hampered by the general neglect of such issues as non-stationary and cointegration. Henrekson (1990) considers the stationarity and cointegration properties of Swedish data, but finds no evidence of Wagner's law. In this study cointegration is taken as a necessary condition for the non-spurious existence of Wagner's law and the testing methodology is applied to British data, 1870-1913. Evidence of co-integration and unidirectional Granger causality is found in the data and support for the law is established. Copyright 1994 by Scottish Economic Society.

Suggested Citation

  • Oxley, Les, 1994. "Cointegration, Causality and Wagner's Law: A Test for Britain 1870-1913," Scottish Journal of Political Economy, Scottish Economic Society, vol. 41(3), pages 286-298, August.
  • Handle: RePEc:bla:scotjp:v:41:y:1994:i:3:p:286-98
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    Cited by:

    1. Antoniou Antonis & Katrakilidis Constantinos & Tsaliki Persefoni, 2013. "Wagner’s Law versus Keynesian Hypothesis: Evidence from pre-WWII Greece," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(4), pages 457-472, June.
    2. Narayan, Paresh Kumar & Nielsen, Ingrid & Smyth, Russell, 2008. "Panel data, cointegration, causality and Wagner's law: Empirical evidence from Chinese provinces," China Economic Review, Elsevier, vol. 19(2), pages 297-307, June.
    3. Jan Kuckuck, 2012. "Testing Wagner's Law at Different Stages of Economic Development - A Historical Analysis of Five Western European Countries," Working Papers 91, Institute of Empirical Economic Research, Osnabrueck University.
    4. Manuel Jaen-Garcia, 2011. "Empirical Analysis of Wagner’s Law for the Spain’s Regions," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 1(1), pages 1-17, November.
    5. repec:eso:journl:v:47:y:2016:i:1:p:69-103 is not listed on IDEAS
    6. Christian Richter & Dimitrios Paparas, 2012. "The validity of Wagner’s Law in Greece during the last 2 centuries," Working Papers 2012.2, International Network for Economic Research - INFER.
    7. Alfonso ARPAIA & Alessandro TURRINI, "undated". "Government Expenditure and Economic Growth in the EU: Long-Run Tendencies and Short-Term Adjustment," EcoMod2008 23800006, EcoMod.
    8. Lars-Erik Borge & Jørn Rattsø, 2002. "Spending Growth With Vertical Fiscal Imbalance: Decentralized Government Spending In Norway, 1880-1990," Economics and Politics, Wiley Blackwell, vol. 14(3), pages 351-373, November.
    9. Durevall, Dick & Henrekson, Magnus, 2011. "The futile quest for a grand explanation of long-run government expenditure," Journal of Public Economics, Elsevier, vol. 95(7), pages 708-722.
    10. Emmanuel Ziramba, 2008. "Wagner'S Law: An Econometric Test For South Africa, 1960-2006," South African Journal of Economics, Economic Society of South Africa, vol. 76(4), pages 596-606, December.
    11. Stephen Kirchner, 2012. "Federal legislative activism in Australia: a new approach to testing Wagner’s law," Public Choice, Springer, vol. 153(3), pages 375-392, December.
    12. Maddalena Cavicchioli & Barbara Pistoresi, 2016. "Testing threshold cointegration in Wagner's Law: the role of military spending," Center for Economic Research (RECent) 116, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
    13. Togbenu, Fo-Kossi Edem, 2017. "Un réexamen de la relation entre dépenses publiques et croissance économique dans les pays en développements à partir d'un modèle de panel dynamique
      [A reexamination of the relation between public
      ," MPRA Paper 81376, University Library of Munich, Germany.
    14. Suzanna-Maria Paleologou, 2016. "The long-run tendency of government expenditure: a semi-parametric modelling approach," Empirical Economics, Springer, vol. 50(3), pages 753-776, May.
    15. 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.
    16. Cavicchioli, Maddalena & Pistoresi, Barbara, 2016. "Testing threshold cointegration in Wagner's Law: The role of military spending," Economic Modelling, Elsevier, vol. 59(C), pages 23-31.
    17. Funashima, Yoshito, 2015. "Wagner's law versus displacement effect," MPRA Paper 68390, University Library of Munich, Germany.
    18. Kucukkale, Yakup & Yamak, Rahmi, 2012. "Cointegration, causality and Wagner’s law with disaggregated data: evidence from Turkey, 1968-2004," MPRA Paper 36894, University Library of Munich, Germany.
    19. 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.
    20. Dimitrios Sideris, 2007. "Wagner's Law in 19th Century Greece: A Cointegration and Causality Analysis," Working Papers 64, Bank of Greece.
    21. Maddalena Cavicchioli & Barbara Pistoresi, 2016. "Testing threshold cointegration in Wagner's Law: the role of military spending," Department of Economics 0078, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    22. Akitoby, Bernardin & Clements, Benedict & Gupta, Sanjeev & Inchauste, Gabriela, 2006. "Public spending, voracity, and Wagner's law in developing countries," European Journal of Political Economy, Elsevier, vol. 22(4), pages 908-924, December.
    23. Magazzino, Cosimo, 2012. "Wagner versus Keynes: Public spending and national income in Italy," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 890-905.
    24. Köppl-Turyna, Monika, 2017. "Drivers of public sector growth in Imperial Austria 1870-1913," Working Papers 11, Agenda Austria.
    25. Magazzino, Cosimo, 2010. "Wagner's law and Italian disaggregated public spending: some empirical evidences," MPRA Paper 26662, University Library of Munich, Germany.

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