Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis

Yıl 2021, Cilt: 8 Sayı: 2, 199 - 210, 04.08.2021

Selim Demez

Öz

One of the main issues which has been given great emphasis in economics literature, particularly since the 19th century, is that of the relationship between public expenditure and economic growth. There are two theoretical approaches in the literature dealing with this relationship. The first is Wagner’s law which states that public expenditure increases as growth expands. The second is related to the Keynesian hypothesis which states that public spending encourages growth. In other words, while Wagner asserts that the causality runs from growth to public spending, Keynes claims that public spending causes growth. In this study, the validity of Wagner’s Law was analyzed with the Dumitrescu and Hurlin (2012) panel causality test using annual data from between the years 1995 and 2019 for eleven European Union member transition economies. Our main purpose in this study was to determine whether public expenditure can be used as an effective policy tool in transition economies that are members of the European Union. The test results revealed that there is one-way causality from growth to public spending. In other words, Wagner’s Law is valid for the country group and period subject to the study.

Anahtar Kelimeler

Transition economies, Wagner’s law, Public expenditures, Growth, Panel causality analysis

AB’ye Üye Geçiş Ekonomilerinde Wagner Kanununun Geçerliliği: Panel Nedensellik Analizi

Öz

Özellikle 19. yy’dan sonra kamu harcamaları ve ekonomik büyüme ilişkisi iktisat literatüründe önemle üzerinde durulan konulardan biridir. Bu ilişki iki teori açısından incelenmektedir. Bunlardan ilki Wagner yasasıdır. Wagner’e göre kamu harcamalarındaki artış büyümenin bir sonucudur. İkincisi ise Keynesyen hipotezdir. Keynes’e göre kamu harcamaları büyümeyi teşvik etmektedir. Diğer bir ifadeyle Wagner yasasında nedensellik büyümeden kamu harcamalarına doğru iken Keynes bunun tam tersini yani kamu harcamalarından büyümeye doğru bir nedensellik ilişkisi olduğunu öne sürmektedir. Bu çalışmada Avrupa Birliği’ne üye on bir geçiş ekonomisi için 1995-2019 yılları arasında yıllık veriler kullanılarak Wagner Yasasının geçerliliği Dumitrescu ve Hurlin (2012) panel nedensellik analizi ile incelenmiştir. Bu çalışmadaki asıl amacımız Avrupa Birliği’ne üye bu geçiş ekonomilerinde kamu harcamalarının etkin bir politika aracı olarak kullanılıp kullanılamayacağını belirlemektir. Test sonuçlarına göre büyümeden kamu harcamalarına tek yönlü nedensellik vardır. Diğer bir ifadeyle çalışmaya konu olan ülke grubu ve dönem için Wagner Yasası geçerlidir.

Anahtar Kelimeler

Geçiş ekonomileri, Wagner yasası, Kamu harcamaları, Büyüme, Panel nedensellik analizi

Kaynakça

• Abbasov, J.A., & Aliyev, K. (2018). Testing Wagner’s law and Keynesian hypothesis in selected PostSoviet countries. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 66(5), 1227-1237. google scholar
• Abdieva, R., Baigonushova, D., & Ganiev, J. (2017). Relationship between government expenditure and economic growth in transition Countries: Case of Kyrgyzstan and Tajikistan. Bilig, (83), 241-258. google scholar
• Ağayev, S. (2012). Kamu harcamaları ve ekonomik büyüme ilişkisi: Eski Sovyetler Birliği ülkelerinde Wagner Yasası analizi (1995-2009). Eskişehir Osmangazi Üniversitesi İktisadi ve İdari Bilimler Dergisi, 7(2). google scholar
• Al-Faris, A. F. (2002). Public expenditure and economic growth in the Gulf Cooperation Council countries. Applied economics, 34(9), 1187-1193. google scholar
• Ansari, M. I., Gordon, D. V., & Akuamoah, C. (1997). Keynes versus Wagner: public expenditure and national income for three African countries. Applied Economics, 29(4), 543-550. google scholar
• Arısoy, A. G. İ. (2005). Wagner ve Keynes hipotezleri çerçevesinde Türkiye’de kamu harcamaları ve ekonomik büyüme ilişkisi. Çukurova Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 14(2), 63-80. google scholar
• Babatunde, M. A. (2011). A bound testing analysis of Wagner’s law in Nigeria: 1970-2006. Applied economics, 43(21), 2843-2850. google scholar
• Biswal, B., Dhawan, U., & Lee, H. Y. (1999). Testing Wagner versus Keynes using disaggregated public expenditure data for Canada. Applied Economics, 31(10), 1283-1291. google scholar
• Bozoklu, Ş., & Yılancı, V. (2013). Finansal gelişme ve iktisadi büyüme arasındaki nedensellik ilişkisi: Gelişmekte olan ekonomiler için analiz. Dokuz Eylül Üniversitesi İktisadi İdari Bilimler Fakültesi Dergisi, 28(2), 161-187. google scholar
• Breusch, T. S., & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. The review of economic studies, 47(1), 239-253. google scholar
• Bulut, Ö. Ü. R. (2019). Geçiş ekonomileri ve ülkeleri. Ayrıntı Dergisi, 6(70). google scholar
• Chang, T. (2002). An econometric test of Wagner’s law for six countries based on cointegration and error-correction modelling techniques. Applied economics, 34(9), 1157-1169. google scholar
• Chletsos, M., & Kollias, C. (1997). Testing Wagner’s law using disaggregated public expenditure data in the case of Greece: 1958-93. Applied Economics, 29(3), 371-377. google scholar
• Das, P. (2019). Econometrics in theory and practice Analysis of Cross Section, Time Series and Panel Data with Stata 15.1. Springer Nature Singapore Pte Ltd., ISBN: 978-981-32-9019-8, pp. 565. google scholar
• Dumitrescu, E. I., & Hurlin, C. (2012). Testing for Granger non-causality in heterogeneous panels. Economic modelling, 29(4), 1450-1460. google scholar
• Granger, C. W. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica: journal of the Econometric Society, 424-438. google scholar
• Gurgul, H., Lach, L., & Mestel, R. (2012). The relationship between budgetary expenditure and economic growth in Poland. Central European Journal of Operations Research, 20(1), 161-182. google scholar
• Huang, C. J. (2006). Government expenditures in China and Taiwan: Do they follow Wagner’s law? Journal of economic development, 31(2), 139. google scholar
• Iniguez-Montiel, A. J. (2010). Government expenditure and national income in Mexico: Keynes versus Wagner. Applied Economics Letters, 17(9), 887-893. google scholar
• Iyare, S. O., & Lorde, T. (2004). Co-integration, causality and Wagner’s law: tests for selected Caribbean countries. Applied Economics Letters, 11(13), 815-825. google scholar
• Jantsan, S. (2013). Geçiş Ekonomilerinde Reform Sürecinin Değerlendirilmesi. Hacettepe Üniversitesi Sosyal Bilimler Enstitüsü İktisat Anabilim Dalı, Yüksek Lisans Tezi, Ankara. google scholar
• Katchanovski, I. (2000). Divergence in growth in post-communist countries. Journal of Public Policy, 55-81. google scholar
• Kesici, M., R. (2008). Avrupa Birliği ile Bütünleşme Sürecinde Geçiş Ekonomileri ve Istihdam: Polonya ve Türkiye örneği. Kocaeli Üniversitesi Sosyal Bilimler Enstitüsü, Doktora Tezi, Kocaeli. google scholar
• Kolluri, B. R., Panik, M. J., & Wahab, M. S. (2000). Government expenditure and economic growth: evidence from G7 countries. Applied Economics, 32(8), 1059-1068. google scholar
• Lahirushan, K. P. K. S., & Gunasekara, W. G. V. (2015). The impact of government expenditure on economic growth: A study of Asian countries. International Journal of Humanities and Social Sciences, 9(9), 3152-3160. google scholar
• Lingxiao, W. A. N. G., Peculea, A. D., & Xu, H. (2016). The relationship between public expenditure and economic growth in Romania: Does it obey Wagner’s or Keynes’s Law?. Theoretical & Applied Economics, 23(3). google scholar
• Liu, L. C. H., Hsu, C. E., & Younis, M. Z. (2008). The association between government expenditure and economic growth: Granger causality test of US data, 1947-2002. Journal of Public Budgeting, Accounting & Financial Management. google scholar
• Loizides, J., & Vamvoukas, G. (2005). Government expenditure and economic growth: Evidence from trivariate causality testing. Journal of AppliedEconomics, 8(1), 125-152. google scholar
• Magazzino, C. (2012). Wagner versus Keynes: Public spending and national income in Italy. Journal of Policy Modeling, 34(6), 890-905. google scholar
• Menyah, K., Nazlioglu, S., & Wolde-Rufael, Y. (2014). Financial development, trade openness and economic growth in African countries: New insights from a panel causality approach. Economic Modelling, 37, 386-394. google scholar
• Menyah, K., & Wolde-Rufael, Y. (2013). Government expenditure and economic growth: The Ethiopian experience, 1950-2007. The Journal ofDeveloping Areas, 263-280. google scholar
• Oyinlola, M. A., & Akinnibosun, O. (2013). Public expenditure and economic growth nexus: Further evidence from Nigeria. Journal of economics and international finance, 5(4), 146-154. google scholar
• Odhiambo, N. M. (2015). Government expenditure and economic growth in South Africa: An empirical investigation. Atlantic Economic Journal, 43(3), 393-406. google scholar
• Paparas, D., & Stoian, A. (2016). The validity of Wagner’s Law in Romania during 1995-2015, https://mpra.ub.uni-muenchen.de/74378/ google scholar
• Papava, V. (2005). On the theory of post-communist economic transition to market. International Journal of Social Economics, 32(1/2), 77-97. google scholar
• Pesaran, M. H. (2004). General diagnostic tests for cross-sectional dependence in panels. Empirical Economics, 1-38. google scholar
• Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross-section dependence. Journal of applied econometrics, 22(2), 265-312. google scholar
• Pesaran, M. H., & Yamagata, T. (2008). Testing slope homogeneity in large panels. Journal of econometrics, 142(1), 50-93. google scholar
• Pula, L., & Elshani, A. (2018). The relationship between public expenditure and economic growth in Kosovo: Findings from a johansen co-integrated test and a granger causality test. Ekonomika (Economics), 97(1), 4762. google scholar
• Sakınç, S. (2005). Geçiş ekonomileri ve Orta Asya Türk Cumhuriyetlerinde ekonomik reformlar. Celal Bayar Üniversitesi. google scholar
• Samudram, M., Nair, M., & Vaithilingam, S. (2009). Keynes and Wagner on government expenditures and economic development: the case of a developing economy. Empirical Economics, 36(3), 697-712. google scholar
• Saridogan, H. Ö., & Gülşen, M. A. (2020). Geçiş ekonomilerinde kamu harcamaları-ekonomik büyüme ilişkisi: 1998-2017 dönemi. Ömer Halisdemir Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 13(2), 364-370. google scholar
• Singh, B., & Sahni, B. S. (1984). Causality between public expenditure and national income. The Review of economics and Statistics, 630-644. google scholar
• Srinivasan, P. (2013), “Causality between public expenditure and economic growth: The Indian case”, International Journal ofEconomics and Management, Vol. 7(2): 335-347. google scholar
• Tang, T. C. (2001). Testing the relationship between government expenditure and national income in Malaysia. Analisis, 8(1&2), 37-51. google scholar
• Tatoğlu, F. Y. (2017). Panel zaman serileri analizi. Beta Yayınları, İstanbul. google scholar
• Thornton, J. (1999). Cointegration, causality and Wagner’s Law in 19th century Europe. Applied Economics Letters, 6(7), 413-416. google scholar
• Wagner, A. (1883) Three extracts on public finance, in Classics in the Theory of Public Finance (Eds) R. A. Musgrave and A. T. Peacock (1958), MacMillan, London, pp. 119-36. google scholar
• Wahab, M. (2004). Economic growth and government expenditure: evidence from a new test specification. Applied economics, 36(19), 2125-2135. google scholar
• Wu, S. Y., Tang, J. H., & Lin, E. S. (2010). The impact of government expenditure on economic growth: How sensitive to the level of development?. Journal of Policy Modeling, 32(6), 804-817. google scholar
• Ziramba, E. (2008). Wagner’s law: An econometric test for South Africa, 1960-2006. South African Journal of Economics, 76(4), 596-606. google scholar