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New insights into an old issue: exploring the nexus between government expenditures and economic growth in the United States

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  • Dervis Kirikkaleli
  • Bugra Ozbeser

Abstract

This study investigates the correlation between government expenditures and economic growth by applying the wavelet coherence approach for the period of 1960Q2 – 2019Q3 in the United States. Two main concepts regarding the correlation between government expenditures and economic growth are the renowned Keynesian approach, which argues that government expenditures lead economic growth, and Wagner’s Law, which advocates the opposite. Our results indicate that economic growth leads government expenditures in the long run, whereas government expenditures only enhance economic growth in the short run and in periods of recession.

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  • Dervis Kirikkaleli & Bugra Ozbeser, 2022. "New insights into an old issue: exploring the nexus between government expenditures and economic growth in the United States," Applied Economics Letters, Taylor & Francis Journals, vol. 29(2), pages 129-134, January.
    • Handle: RePEc:taf:apeclt:v:29:y:2022:i:2:p:129-134
    DOI: 10.1080/13504851.2020.1859448
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    Cited by:

    1. Ciro Bazán & Víctor Josué Álvarez-Quiroz & Yennyfer Morales Olivares, 2022. "Wagner’s Law vs. Keynesian Hypothesis: Dynamic Impacts," Sustainability, MDPI, vol. 14(16), pages 1-25, August.

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