Increasing public expenditures: Wagner's law in OECD countries

Serena Lamartina and Andrea Zaghini

No 2008/13, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: The paper proposes a panel cointegration analysis of the joint development of government expenditures and economic growth in 23 OECD countries. The empirical evidence provides indication of a structural positive correlation between public spending and per-capita GDP which is consistent with the so-called Wagner’s law. A long-run elasticity larger than one suggests a more than proportional increase of government expenditures with respect to economic activity. In addition, according to the spirit of the law, we found that the correlation is usually higher in countries with lower per-capita GDP, suggesting that the catching-up period is characterized by a stronger development of government activities with respect to economies in a more advanced state of development.

Keywords: Fiscal Policy; Wagner's Law; Panel Cointegration (search for similar items in EconPapers)
JEL-codes: C23 E62 H50 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (21)

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Related works:
Journal Article: Increasing Public Expenditure: Wagner's Law in OECD Countries (2011)
Journal Article: Increasing Public Expenditure: Wagner’s Law in OECD Countries (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:200813

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