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Wagner’s Law versus Keynesian Hypothesis: Evidence from pre-WWII Greece

Author

Listed:
  • Antoniou Antonis
  • Katrakilidis Constantinos
  • Tsaliki Persefoni

Abstract

With data of over a century, 1833-1938, this paper attempts, for the first time, to analyze the causal relationship between income and government spending in the Greek economy for such a long period; that is, to gain some insight into Wagner and Keynesian Hypotheses. The time period of the analysis represents a period of growth, industrialization and modernization of the economy, conditions which are conducive to Wagner’s Law but also to the Keynesian Hypothesis. The empirical analysis resorts to Autoregressive Distributed Lag (ARDL) Cointegration method and tests for the presence of possible structural breaks. The results reveal a positive and statistically significant long run causal effect running from economic performance towards the public size giving support to Wagner’s Law in Greece, whereas for the Keynesian hypothesis some doubts arise for specific time sub-periods. Key words: Wagner’s Law, Economic growth, ARDL cointegration, Causality.JEL: H50, E69, E62, C22, C51.

Suggested Citation

  • Antoniou Antonis & Katrakilidis Constantinos & Tsaliki Persefoni, 2013. "Wagner’s Law versus Keynesian Hypothesis: Evidence from pre-WWII Greece," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(4), pages 457-472.
    • Handle: RePEc:voj:journl:v:60:y:2013:i:4:p:457-472:id:94
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    More about this item

    Keywords

    Wagner’s Law; Economic growth; ARDL cointegration; Causality;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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