Threshold Cointegration, Asymmetric Causality and Wagner¡¯s Law: The African Experience Revisited

Yaya Keho ()

International Journal of Economics and Finance, 2017, vol. 9, issue 5, 171-180

Abstract: This study re-examines the Wagner's law of public expenditure for six sub-Saharan African countries while relaxing the assumption of a symmetric adjustment process underlying standard cointegration tests and error-correction models. The empirical methodology uses threshold cointegration tests to establish that there is a long-run relationship between government expenditure and per capita GDP for five countries, with income being positively related to public spending. Furthermore, the results of asymmetric Granger-causality tests provide support for Wagner¡¯s law in the long run for five countries (Cameroon, Cote d¡¯Ivoire, Ghana, Kenya, and Senegal), while the Keynesian view holds only in the short run for three countries (Benin, Cameroon, and Cote d¡¯Ivoire). The short run evidence for two countries (Kenya and Senegal) support both Wagner¡¯s law and Keynesian view.

Keywords: Wagner¡¯s law; threshold cointegration; asymmetric error-correction model; causality (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://ccsenet.org/journal/index.php/ijef/article/view/68003/36886 (application/pdf)
http://ccsenet.org/journal/index.php/ijef/article/view/68003 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijefaa:v:9:y:2017:i:5:p:171-180

Access Statistics for this article

More articles in International Journal of Economics and Finance from Canadian Center of Science and Education Contact information at EDIRC.
Bibliographic data for series maintained by Canadian Center of Science and Education ().