Does the Wagner’s Law hold for Thailand? A Time Series Study

Sinha, Dipendra (2007): Does the Wagner’s Law hold for Thailand? A Time Series Study.

Abstract

Wagner’s Law suggests that as the GDP of a country increases, so does its government expenditure. We test for the Law for Thailand using recent advances in econometric techniques. Both total and per capita GDP and government expenditure are used. Ng-Perron unit root tests show that all variables are integrated of order 1. Toda-Yamamoto tests of Granger causality show that there is no causality flowing from either direction between GDP and government expenditure. Autoregressive Distributed Lag (ARDL) tests of cointegration show very weak evidence of a long-run relationship between GDP and government expenditure. Thus, we do not find much evidence that the Wagner’s Law holds for Thailand.

• Item Type: MPRA Paper
• Institution: Ritsumeikan Asia Pacific University, Japan and Macquarie University, Australia
• Language: English
• Keywords: Wagner's Law; causality
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes

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