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Testing Wagner’s Law in the Presence of Structural Changes: New Evidence from Six African Countries (1960-2013)

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  • Yaya Keho

    (Department of Applied Economics, Ecole Nationale Supérieure de Statistique et d’Economie Appliquée Abidjan, 08 BP 03 Abidjan 08, Côte d’Ivoire)

Abstract

This study re-examines the relationship between government expenditure and national income in order to test the validity of Wagner’s law for six African countries over the period from 1960 to 2013. The empirical analysis uses the Gregory and Hansen (1996) cointegration test which allows for a structural break in the long run relationships. We find supporting evidence of Wagner’s law in Ghana over the period 1960-2013 and in Cote d’Ivoire for the period 1960-1995. Evidence for Kenya for the period 1960-1991 supports both Wagner’s law and Keynesian view. The results for the other three countries do not advocate Wagner’s law or its reverse in the long run.

Suggested Citation

  • Yaya Keho, 2016. "Testing Wagner’s Law in the Presence of Structural Changes: New Evidence from Six African Countries (1960-2013)," International Journal of Economics and Financial Issues, Econjournals, vol. 6(1), pages 1-6.
  • Handle: RePEc:eco:journ1:2016-01-01
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    References listed on IDEAS

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    More about this item

    Keywords

    Wagner’s Law; Structural Change; Gross Domestic Product; Cointegration; Granger Causality;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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