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Evidence of Wagner's law from Indian states

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  • Narayan, Seema
  • Rath, Badri Narayan
  • Narayan, Paresh Kumar

Abstract

In this paper, we test for Wagner's law for 15 Indian states. We consider nine panels of states based on geography and level of economic development. Using panel unit-root, panel-cointegration, and panel-Granger causality analysis, we unravel strong evidence of Wagner's law. However, we find that the Wagner's law relationship is consumption rather than capital expenditure driven. This is a fresh revelation and our results are robust to different model specifications.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:ecmode:v:29:y:2012:i:5:p:1548-1557 DOI: 10.1016/j.econmod.2012.05.004
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Devi Prasad DASH & Debi Prasad BAL & Manoranjan SAHOO, 2016. "Nexus between defense expenditure and economic growth in BRIC economies: An empirical investigation," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, pages 89-102.
    2. Funashima, Yoshito & Hiraga, Kazuki, 2016. "Wagner's law, fiscal discipline, and intergovernmental transfer: Empirical evidence at the U.S. and German state levels," MPRA Paper 73551, University Library of Munich, Germany.
    3. repec:eee:transa:v:100:y:2017:i:c:p:319-336 is not listed on IDEAS
    4. 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.
    5. 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.
    6. Funashima, Yoshito, 2015. "Wagner's law versus displacement effect," MPRA Paper 68390, University Library of Munich, Germany.
    7. repec:kap:itaxpf:v:24:y:2017:i:4:d:10.1007_s10797-017-9458-z is not listed on IDEAS

    More about this item

    Keywords

    Wagner's Law; Indian states; Unit root; Cointegration; Panel data; Heterogeneous;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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