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Panel Data, Cointegration, Causality And Wagner'S Law: Empirical Evidence From Chinese Provinces

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  • Paresh Kumar Narayan
  • Ingrid Nielsen
  • Russell Smyth

Abstract

This paper tests Wagner's law of increasing state activity using panels of Chinese provinces. The paper's main methodological contribution is in that we employ for the first time in the literature on Wagner's law a panel unit root, panel cointegration and Granger Causality testing approach. Overall, we find mixed evidence in support of Wagner's law for China's central and western provinces, but no support for Wagner's law for the full panel of provinces or for the panel of China's eastern provinces.

Suggested Citation

  • Paresh Kumar Narayan & Ingrid Nielsen & Russell Smyth, 2006. "Panel Data, Cointegration, Causality And Wagner'S Law: Empirical Evidence From Chinese Provinces," Monash Economics Working Papers 01/06, Monash University, Department of Economics.
  • Handle: RePEc:mos:moswps:2006-01
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    Cited by:

    1. 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.
    2. Hany Abdel-Latif & Tapas Mishra, 2016. "Asymmetric Growth Impact of Social Policy: A Post-Shock Policy Scenario for Egypt," Working Papers 1035, Economic Research Forum, revised Aug 2016.
    3. Hassan Mohammadi & Rati Ram, 2015. "Economic Development and Government Spending: An Exploration of Wagner’s Hypothesis during Fifty Years of Growth in East Asia," Economies, MDPI, Open Access Journal, vol. 3(4), pages 1-11, October.
    4. Wu, Shih-Ying & Tang, Jenn-Hong & Lin, Eric S., 2010. "The impact of government expenditure on economic growth: How sensitive to the level of development?," Journal of Policy Modeling, Elsevier, vol. 32(6), pages 804-817, November.
    5. Alimi, R. Santos, 2013. "Testing Augmented Wagner’s Law for Nigeria Based on Cointegration and Error-Correction Modelling Techniques," MPRA Paper 52319, University Library of Munich, Germany.
    6. Manuel Jaen-Garcia, 2011. "Empirical Analysis of Wagner’s Law for the Spain’s Regions," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 1(1), pages 1-17, November.
    7. repec:ags:afjecr:264386 is not listed on IDEAS
    8. repec:eso:journl:v:47:y:2016:i:1:p:69-103 is not listed on IDEAS
    9. He, Qichun, 2011. "Dances with Chinese data: are the reform period Chinese provincial panel data reliable?," MPRA Paper 35418, University Library of Munich, Germany.
    10. Xianfeng Huang & Ping Li & Richard Lotspeich, 2009. "The size of the SOE sector and macroeconomic performance: an empirical study based on Chinese provincial data," Economic Change and Restructuring, Springer, vol. 42(4), pages 319-343, November.
    11. Nicholas Odhiambo, 2015. "Government Expenditure and Economic Growth in South Africa: an Empirical Investigation," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(3), pages 393-406, September.
    12. Cosimo Magazzino, 2012. "The Nexus between Disaggregated Public Spending and GDP in the Euro Area," Economics Bulletin, AccessEcon, vol. 32(3), pages 2560-2579.
    13. Magazzino, Cosimo, 2010. "Wagner's law and augmented Wagner's law in EU-27. A time-series analysis on stationarity, cointegration and causality," MPRA Paper 26668, University Library of Munich, Germany.
    14. Kumar, Saten, 2009. "Further Evidence on Public Spending and Economic Growth in East Asian Countries," MPRA Paper 19298, University Library of Munich, Germany.
    15. repec:voj:journl:v:63:y:2016:i:1:p:45-60 is not listed on IDEAS
    16. Philip Gunby & Yinghua Jin, 2016. "Determinants of Chinese Government Size: An Extreme Bounds Analysis," Working Papers in Economics 16/25, University of Canterbury, Department of Economics and Finance.
    17. V. Chandran Govindaraju & Ramesh Rao & Sajid Anwar, 2011. "Economic growth and government spending in Malaysia: a re-examination of Wagner and Keynesian views," Economic Change and Restructuring, Springer, vol. 44(3), pages 203-219, August.
    18. Kucukkale, Yakup & Yamak, Rahmi, 2012. "Cointegration, causality and Wagner’s law with disaggregated data: evidence from Turkey, 1968-2004," MPRA Paper 36894, University Library of Munich, Germany.
    19. repec:kap:itaxpf:v:24:y:2017:i:4:d:10.1007_s10797-017-9458-z is not listed on IDEAS
    20. Ibok, Otu William & Bassey, Nsikan Edet, 2014. "Wagner’S Law Revi̇si̇ted: The Case Of Nigerian Agricultural Sector (1961 – 2012)," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 0(Number 3), pages 1-14, July.
    21. repec:ulp:buopee:v:36:y:2017:m:06:i:4 is not listed on IDEAS
    22. Magazzino, Cosimo, 2012. "Wagner versus Keynes: Public spending and national income in Italy," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 890-905.
    23. 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.
    24. Maria Jesus Herrerias & Vicente Orts, 2011. "The driving forces behind China’s growth," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(1), pages 79-124, January.
    25. Magazzino, Cosimo, 2010. "Wagner's law and Italian disaggregated public spending: some empirical evidences," MPRA Paper 26662, University Library of Munich, Germany.

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