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Wagner’S Law And Social Welfare: The Case Of The Kingdom Of Saudi Arabia


  • Albert WIJEWEERA
  • Dalton GARIS


This paper uses data from the Kingdom of Saudi Arabia (KSA) to empirically test Wagner's Law in explaining public expenditure growth in association with economic growth; and if this growth enhanced the public welfare. The Kingdom of Saudi Arabia (KSA) has witnessed a marked increase in government expenditure. We use the Engle and Granger (E-G) two-step cointegration method to examine the relationship between government expenditure and economic growth. Out of the four model specifications that we have tested, two models indicate that a positive long run relationship exists between government expenditure and economic growth. However, the income elasticities are not large enough to suggest that the growth in government expenditure exceeds the growth in national income; only that upward pressure is exerted. Looking at available data it is clear that governmental expenditures from GDP expansions increased public welfare for Saudis over the test period.

Suggested Citation

  • Albert WIJEWEERA & Dalton GARIS, 2009. "Wagner’S Law And Social Welfare: The Case Of The Kingdom Of Saudi Arabia," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 9(2).
  • Handle: RePEc:eaa:aeinde:v:9:y:2009:i:2_16

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    References listed on IDEAS

    1. A. F. Al-Faris, 2002. "Public expenditure and economic growth in the Gulf Cooperation Council countries," Applied Economics, Taylor & Francis Journals, vol. 34(9), pages 1187-1193.
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    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies


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