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Wagner’s Law versus Keynesian Hypothesis: Evidence from pre-WWII Greece

Antoniou Antonis (), Constantinos Katrakilidis () and Persefoni Tsaliki ()
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Antoniou Antonis: State General Archives of Greece, Greece

Panoeconomicus, 2013, vol. 60, issue 4, 457-472

Abstract: With data of over a century, 1833-1938, this paper attempts, for the first time, to analyze the causal relationship between income and government spending in the Greek economy for such a long period; that is, to gain some insight into Wagner and Keynesian Hypotheses. The time period of the analysis represents a period of growth, industrialization and modernization of the economy, conditions which are conducive to Wagner’s Law but also to the Keynesian Hypothesis. The empirical analysis resorts to Autoregressive Distributed Lag (ARDL) Cointegration method and tests for the presence of possible structural breaks. The results reveal a positive and statistically significant long run causal effect running from economic performance towards the public size giving support to Wagner’s Law in Greece, whereas for the Keynesian hypothesis some doubts arise for specific time sub-periods.

Keywords: Wagner’s Law; Economic growth; ARDL cointegration; Causality (search for similar items in EconPapers)
JEL-codes: C22 C51 E62 E69 H50 (search for similar items in EconPapers)
Date: 2013
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Handle: RePEc:voj:journl:v:60:y:2013:i:4:p:457-472