Wagner's Law, Relative Prices and the Size of the Public Sector

Norman Gemmell

The Manchester School of Economic & Social Studies, 1990, vol. 58, issue 4, 361-77

Abstract: This paper examines the effects on the size of the government sector of changes in per capita income, population and relative output prices, using a recently revised internationally comparable data set for 117 countries. The main hypotheses considered are (1) does Wagner's 'law' hold? ( b) does government output respond to price changes? (c) does government produce mainly 'pure' private or public goods? Cross-section and time-series evidence suggests (i) almost no support for Wagner's 'law'; (ii) relative prices are important for government output; and (iii) the hypothesis that governments produce pure private goods is generally accepted. These results differ from most previous studies which have ignored relative price effects and constrained income and population elasticities. Copyright 1990 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:bla:manch2:v:58:y:1990:i:4:p:361-77

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