ECONOMIC DEVELOPMENT IN SUB-SAHARAH AFRICA AND ANALYSIS OF WAGNER`S LAW, 2005-2015

Choudhry Mohammad Hanif and Elsadig Ahmed

Applied Econometrics and International Development, 2018, vol. 18, issue 2, 101-116

Abstract: The paper empirically tests the validity of the Wagner’s law in selected Sub-Saharan Africa (SSA), divided into higher and lower income countries for the period 2005-2014. Panel fixed effect model was used to investigate the relationship between public expenditure and economic growth following five identified framework in the econometric literature. It was found that the income elasticities from the Peacock, Goffman and Gupta versions of the Wagner’s law were positive and statistically significant. The impact of income on growth and vice versa in higher and lower income countries in Sub-Saharan Africa indicates that big government is a positive function of growth among the selected lower income countries. All the versions of Wagner’s law tested indicate that for lower income countries in SSA, there is a positive and statistically significant relationship (except in the case of the Mann’s version) between income and growth.

Keywords: Economic growth; public expenditure; Sub-Saharan Africa; Wagner’s law. (search for similar items in EconPapers)
Date: 2018
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