Why is public spending growing? Wagner's Law in the Argentine case

Juan Carro ()
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Juan Carro: Universidad de Buenos Aires

Revista de Economía Política de Buenos Aires, 2021, issue 22, 73-117

Abstract: Why does public expenditure grow? Wagner´s law assumes that the increase in size of the public expenditure is a logical consequence of economic growth. Does Wagner´s law apply in the case of Argentina? In order to answer this question, the evolution of public expenditure between 1983 and 2018 is analyzed and a vector error correction model (VEC) is proposed. Based on this methodology, it is concluded that the increase in GDP has had an expansive effect on the size of public expenditure. Therefore, the suitability of the application of the Wagner´s law for the analyzed period is corroborated.

Keywords: public expenditure; Wagner's law; vector error correction model (search for similar items in EconPapers)
JEL-codes: C50 E62 H50 (search for similar items in EconPapers)
Date: 2021
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