An Empirical Investigation of Wagner's Hypothesis by Using a Model Occurrence Framework

Gary Koop and Dale J. Poirier

Journal of the Royal Statistical Society Series A, 1995, vol. 158, issue 1, 123-141

Abstract: Wagner's hypothesis asserts that as a country's level of development increases so does the relative size of its public sector. This study examines the empirical validity of Wagner's hypothesis. Based on data from 86 countries, the study employs a model occurrence framework to determine whether Wagner's hypothesis holds for the countries in which it is expected to. The results are discouraging for believers in Wagner's hypothesis. Indeed, Wagner's hypothesis is supported in only a third of the countries and its variable occurrence is not explained well in terms of a priori applicability conditions either in sample or out of sample.

Date: 1995
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jorssa:v:158:y:1995:i:1:p:123-141

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