Testing Wagner versus Keynesian Hypothesis for Pakistan: The Role of Aggregate and Disaggregate Expenditure
Wajid Ali and
Kashif Munir ()
MPRA Paper from University Library of Munich, Germany
The objective of this study is to examine the relationship between government expenditure (at aggregate as well as disaggregate level) and economic growth for Pakistan. The study further aims to find causal relationship for existence of applicability of Wagner’s or Keynesian hypothesis. Engle and Granger (1987) two step procedure and Granger causality test (1969) are employed for time series data for the period 1976 to 2015. Results suggest that only expenditure on social, economic and education services have proposed long-run association with economic growth in five of basic versions of Wagner’s law for Pakistan. The causality tests are showing mix results regarding existence of applicability of Wagner’s or Keynesian hypothesis. Expenditure on current subsidies, expenditure on defence, current expenditure and developmental expenditure are in favor of Wagner’s law in most of the cases, where causality runs from economic growth to government expenditure. Results of expenditure on social, economic and education services are in line with existence of Keynesian hypothesis, where causality flows from government expenditure to economic growth. On the basis of results, one may conclude that government should invest for expenditure on social, economic and education services to achieve sustainable economic growth by spending more on human resource development.
Keywords: Government Expenditure; Economics Growth; Cointegration; Causality; Pakistan. (search for similar items in EconPapers)
JEL-codes: C32 E62 H51 H52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/74570/1/MPRA_paper_74570.pdf original version (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:74570
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Series data maintained by Joachim Winter ().