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Does the Wagner’s Law hold for Thailand? A Time Series Study


  • Sinha, Dipendra


Wagner’s Law suggests that as the GDP of a country increases, so does its government expenditure. We test for the Law for Thailand using recent advances in econometric techniques. Both total and per capita GDP and government expenditure are used. Ng-Perron unit root tests show that all variables are integrated of order 1. Toda-Yamamoto tests of Granger causality show that there is no causality flowing from either direction between GDP and government expenditure. Autoregressive Distributed Lag (ARDL) tests of cointegration show very weak evidence of a long-run relationship between GDP and government expenditure. Thus, we do not find much evidence that the Wagner’s Law holds for Thailand.

Suggested Citation

  • Sinha, Dipendra, 2007. "Does the Wagner’s Law hold for Thailand? A Time Series Study," MPRA Paper 2560, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:2560

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    References listed on IDEAS

    1. Tsangyao Chang & WenRong Liu & Steven Caudill, 2004. "A re-examination of Wagner's law for ten countries based on cointegration and error-correction modelling techniques," Applied Financial Economics, Taylor & Francis Journals, vol. 14(8), pages 577-589.
    2. Bharat Kolluri & Michael Panik & Mahmoud Wahab, 2000. "Government expenditure and economic growth: evidence from G7 countries," Applied Economics, Taylor & Francis Journals, vol. 32(8), pages 1059-1068.
    3. Perron, Pierre & Rodriguez, Gabriel, 2003. "GLS detrending, efficient unit root tests and structural change," Journal of Econometrics, Elsevier, vol. 115(1), pages 1-27, July.
    4. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    5. Bird, Richard M, 1971. "Wagner's o Law' of Expanding State Activity," Public Finance = Finances publiques, , vol. 26(1), pages 1-26.
    6. Serena Ng & Pierre Perron, 2001. "LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power," Econometrica, Econometric Society, vol. 69(6), pages 1519-1554, November.
    7. Henrekson, Magnus, 1993. "Wagner's Law--A Spurious Relationship?," Public Finance = Finances publiques, , vol. 48(3), pages 406-415.
    8. Chi-Ang Lin, 2002. "On the level of persistence in government size: time-series evidence and implications for the US," Applied Economics, Taylor & Francis Journals, vol. 34(8), pages 999-1005.
    9. MacKinnon, James G, 1996. "Numerical Distribution Functions for Unit Root and Cointegration Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 601-618, Nov.-Dec..
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    Cited by:

    1. repec:eso:journl:v:47:y:2016:i:1:p:69-103 is not listed on IDEAS
    2. Emmanuel Ziramba, 2008. "Wagner'S Law: An Econometric Test For South Africa, 1960-2006," South African Journal of Economics, Economic Society of South Africa, vol. 76(4), pages 596-606, December.
    3. Alfred Wu & Mi Lin, 2012. "Determinants of government size: evidence from China," Public Choice, Springer, vol. 151(1), pages 255-270, April.
    4. Cosimo Magazzino, 2012. "The Nexus between Disaggregated Public Spending and GDP in the Euro Area," Economics Bulletin, AccessEcon, vol. 32(3), pages 2560-2579.
    5. Asuman Oktayer & Nagihan Oktayer, 2013. "Testing Wagner´s Law for Turkey: Evidence from a Trivariate Causality Analysis," Prague Economic Papers, University of Economics, Prague, vol. 2013(2), pages 284-301.
    6. Saten Kumar & Don J. Webber & Scott Fargher, 2009. "Wagner’s Law Revisited: Cointegration and Causality tests for New Zealand," Working Papers 0917, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    7. Kumar, Saten, 2009. "Further Evidence on Public Spending and Economic Growth in East Asian Countries," MPRA Paper 19298, University Library of Munich, Germany.
    8. Nicholas Awuse & Patrick Tandoh-Offin, 2014. "A Quantitative and Theoretical Analysis of Ghana¡¯s Internal Migration, Economic Growth and poverty Reduction: A Disaggregated Approach, from 1980 to 2012," Business and Economic Research, Macrothink Institute, vol. 4(1), pages 14-22, June.
    9. Magazzino, Cosimo, 2012. "Wagner versus Keynes: Public spending and national income in Italy," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 890-905.

    More about this item


    Wagner's Law; causality;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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