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Government expenditure and national income in Mexico: Keynes versus Wagner

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  • Alberto Iniguez-Montiel

Abstract

This article examines the relationship between government expenditure and national income in Mexico by testing the validity of Wagner's law and Keynes's hypothesis for the period between 1950 and 1999. More specifically, by applying time-series analysis, government-spending and national-income variables were found to be nonstationary and cointegrated, thus satisfying a long-run equilibrium condition. In addition, through the application of Granger causality tests to error-correction models, unidirectional causality, running from Gross Domestic Product (GDP) to government-expenditure variables, could be established between the variables and, therefore, only Wagner's law was found to be valid in Mexico's case for the period of study.

Suggested Citation

  • Alberto Iniguez-Montiel, 2010. "Government expenditure and national income in Mexico: Keynes versus Wagner," Applied Economics Letters, Taylor & Francis Journals, vol. 17(9), pages 887-893.
    • Handle: RePEc:taf:apeclt:v:17:y:2010:i:9:p:887-893
    DOI: 10.1080/13504850802599433
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    References listed on IDEAS

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    1. World Bank, 2004. "Mexico : Public Expenditure Review, Volume 2. Main Report," World Bank Publications - Reports 15660, The World Bank Group.
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    Cited by:

    1. Isiaq O. Oseni & Ibrahim A. Adekunle, 2020. "Relevance of Wagner’s Hypothesis in Achieving Sustainable Development Agenda in Nigeria," Research Africa Network Working Papers 20/006, Research Africa Network (RAN).
    2. Abdulnasser Hatemi-J, 2014. "On the interaction between government spending and economic performance in Sweden: an asymmetric approach," Applied Economics Letters, Taylor & Francis Journals, vol. 21(15), pages 1099-1103, October.
    3. Philip Arestis & Hüseyin Şen & Ayşe Kaya, 2021. "On the linkage between government expenditure and output: empirics of the Keynesian view versus Wagner’s law," Economic Change and Restructuring, Springer, vol. 54(2), pages 265-303, May.
    4. Selim Demez, 2021. "Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 8(2), pages 199-210, July.
    5. Wahyudi Wahyudi, 2020. "The Relationship between Government Spending and Economic Growth Revisited," International Journal of Economics and Financial Issues, Econjournals, vol. 10(6), pages 84-88.
    6. Yoshito Funashima, 2017. "Wagner’s law versus displacement effect," Applied Economics, Taylor & Francis Journals, vol. 49(7), pages 619-634, February.
    7. Khairul Amri & Raja Masbar & B. S. Nazamuddin & Hasdi Aimon, 2024. "Does Unemployment Moderate the Effect of Government Expenditure on Poverty? A Cross-Provinces Data Evidence from Indonesia," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 92-113.
    8. Isiaq O. Oseni & Ibrahim A. Adekunle, 2020. "Relevance of Wagner’s Hypothesis in Achieving Sustainable Development Agenda in Nigeria," Working Papers of the African Governance and Development Institute. 20/006, African Governance and Development Institute..
    9. Funashima, Yoshito, 2015. "Wagner's law versus displacement effect," MPRA Paper 68390, University Library of Munich, Germany.

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