Wagner on government spending and national income: A new look at an old relationship

The validity of “augmented” Wagner’s Law is evaluated using a sample of twelve OECD countries over the period of 1995–2015. The bootstrap panel Granger causality approach is utilized to detect the direction of causality between government spending and GDP, focusing on cross-sectional dependence, slo...

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Veröffentlicht in:369 EGFR SIGNALING IMPAIRS THE ANTIVIRAL ACTIVITY OF INTERFERON-ALPHA. - 2013 JPMOD : a social science forum of world issues. - Amsterdam [u.a.]
1. Verfasser: Irandoust, Manuchehr (VerfasserIn)
Format: Online-Aufsatz
Sprache:English
Veröffentlicht: 2019transfer abstract
Zugriff auf das übergeordnete Werk:369 EGFR SIGNALING IMPAIRS THE ANTIVIRAL ACTIVITY OF INTERFERON-ALPHA
Schlagworte:H50 H60 E60
Umfang:11
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520 |a The validity of “augmented” Wagner’s Law is evaluated using a sample of twelve OECD countries over the period of 1995–2015. The bootstrap panel Granger causality approach is utilized to detect the direction of causality between government spending and GDP, focusing on cross-sectional dependence, slope heterogeneity, and structural breaks. The results show a causal relationship in favor of Wagner’s Law in seven countries, thus GDP is long-run forcing to government expenditures and that the causality runs from the former to the latter variable. The policy implication of the findings is that the upholding of Wagner’s Law in the presence of aging population growth and increasing demand for welfare services may force policy makers to raise taxes or it leads to excessive borrowing which might affect sustainability of public finances. 
520 |a The validity of “augmented” Wagner’s Law is evaluated using a sample of twelve OECD countries over the period of 1995–2015. The bootstrap panel Granger causality approach is utilized to detect the direction of causality between government spending and GDP, focusing on cross-sectional dependence, slope heterogeneity, and structural breaks. The results show a causal relationship in favor of Wagner’s Law in seven countries, thus GDP is long-run forcing to government expenditures and that the causality runs from the former to the latter variable. The policy implication of the findings is that the upholding of Wagner’s Law in the presence of aging population growth and increasing demand for welfare services may force policy makers to raise taxes or it leads to excessive borrowing which might affect sustainability of public finances. 
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