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A Supply Side Analysis of the Laffer Hypothesis


  • Yunker, James A


Using a good procedure and internationally comparable data for the period 1950-80 in respect of sixty-three countries, an investigation is conducted of Granger causality between (1) GDP per capita and share of general government in GDP and (2) GDP per capita and government expenditure per ca pita. Although much variation is observed in the patterns of causality across various countries, a rough generalization would seem to be that very limited support is found for the direction of causality implicit in Adolph Wagner's (1890) hypothesis, and support is also lacking in most cases for the causal order implied by several common macroeconomic models.

Suggested Citation

  • Yunker, James A, 1986. "A Supply Side Analysis of the Laffer Hypothesis," Public Finance = Finances publiques, , vol. 41(3), pages 372-392.
  • Handle: RePEc:pfi:pubfin:v:41:y:1986:i:3:p:372-92

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