Testing the Validity of Wagner’s Law in the Czech Republic

Žaneta Tesařová ()
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Žaneta Tesařová: Prague University of Economics and Business

Chapter Chapter 34 in Regulation of Finance and Accounting, 2022, pp 435-448 from Springer

Abstract: Abstract This chapter analyses the relationship between nominal gross domestic product and nominal public expenditures in the Czech Republic and the direction of the connection to investigate if the Keynesian relationship holds or Wagner’s law holds. The estimate uses the standard Peacock-Wiseman specification of Wagner’s law and provides the results for the Czech Republic. Our main aim is to identify a long- and/or short-term relationship between the nominal GDP and nominal government expenditures (both current and capital expenditures). We employ a VAR model, Johansen Cointegration test, and VEC model to address this question. The studied period starts in the first quarter of 1999 and ends in the second quarter of 2019. The results support Wagner’s law validity in the long and the Keynesian theory in the short run in the Czech Republic.

Keywords: Development; Expenditures; Public finance; Wagner’s law; Keynes; Cointegration (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-99873-8_34

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DOI: 10.1007/978-3-030-99873-8_34

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