Testing the validity of wagner’s lawin inflation targeting in developing countries

Bu çalışma gelişmiş ekonometrik teknikleri dikkate alır ve 1995-2007 yılları arası enflasyon hedeflemesi yapan 17 gelişmekte olan ülke için Gayri Safi Milli Hasıla (GSMH) ile Kamu harcamaları arasındaki uzun dönemli ilişkiyi açıklayan Wagner Yasası’nı Peacock-Wiseman (1967) ve Gupta (1967)’ya ait modeller çerçevesinde test etmektedir. Peacock and Wiseman (1967)’nın modeli ile Gupta (1967)’nin modeline göre, enflasyon hedeflemesi yapan gelişmekte olan 17 ülke için ampiriksel olarak Wagner Yasası’nın geçerliliğini desteklemede güçlü kanıtlar elde edilmiştir.

Enflasyon hedeflemesi yapan gelişmekte olan ülkelerde wagner yasası’nın geçerliliğinin testi

This paper takes into account advanced econometric techniques and tests Wagner’s law of long-run relationship between public expenditure and GDP for 17 inflation targeting in developing countries by using the models belong to Peacock and Wiseman (1967) and Gupta (1967) over the period of 1995-2007. According to Peacock and Wiseman (1967)’s model and Gupta (1967)’s model, it is empirically found that there exists strong evidences in support of the validity of the Wagner’s law for 17 inflation targeting in developing countries.

PDF

___

ABIZADEH, S. and GRAY, J. “Wagner’s Law: a Pooled Time-Series Cross-Section Comparison” National Tax Journal, 1985, 88: 209-18.
ADEDEJI, O.S. and THORNTON, J. “Saving, Investment and Capital Mobility in the African Countries”. Journal of African Economies, 2007, 16 (3), 393- 405.
AHSAN, Syed M., ANDY C. C. KWAN and BALBIR S. Sahni, “Causality between Government Consumption Expenditure and National Income: OECD Countries” Public Finance, 1989, 44(2), pp. 204-224.
AL-FARIS, A. F. “Public Expenditure and Economic Growth in the Gulf Cooperation Council Countries”, Applied Economics, 2002, 34(9), pp. 1187-1193.
ANDREI, T. Stancu, S. Lacob, A, Herteliu,C. Oancea, B. “Testing Wagner’s Law for Romania”, Proceedings of the Challanges for Analysis of the Economy, the Business, and Social Progress, International Scientific Conference, ISBN 978-963-06-9558-9, 2009.
ARISOY, İ. “Wagner ve Keynes Hipotezleri Çerçevesinde Türkiye’de Kamu Harcamaları ve Ekonomik Büyüme İlişkisi”, Journal of Cukurova University Institute of Social Sciences, 2005, 14(2): 63-80.
BALTAGI, B. H. and C. Kao. “Nonstationary Panels, Cointegration in Panels and Dynamic Panels: A Survey”. Advances in Econometrics 15, 7-51. 2000.
BARBIERI, L. “Panel Cointegration Tests: A Review”. Rivista Internazionale di Scienze Sociali, 116, 2008.
BARTH J.R, KELEHER R.E, RUSSEK F.S “The Scale of Government and Economic Activity”,Southern Economic Journal,1990, 13, pp.142–183.
CHENG, B.S. and LAI, T.W. “Government Expenditure and Economic Growth in South Korea: A VAR Approach” Journal of Economic Development, 1997, 22(1), pp. 11-24.
GOFFMAN, I. J. "On the Empirical Testing of Wagner's Law: A Technical Note", Public Finance, 1968, 23(3): 359-364.
GUPTA, S.“Public Expenditure and Economic Growth. A Time Series Analysis” Public Finance, 1967, 22(4): 423-461.
HADRI, K. Testing for Stationarity in Heterogeneous Panel Data,” Econometrics Journal, 2000, 3: 148-161.
HENREKSON, M. “Wagner’s Law: A Spurious Relationship?”, Public Finance, Vol. 48, No. 2, 1993, pp. 406-415.
HOLMES, James M & HUTTON, Patricia A, “On the Causal Relationship between Government Expenditures and National Income”, The Review of Economics and Statistics, 1990, 72(1), pp. 87-95.
HSIAO, C. (2003). Analysis Of Panel Data. Cambridge: Cambridge University Press.
IM, Kyung So, PESARAN, M. Hashem and SHIN, Yongcheol. “Testing for Unit Roots in Heterogeneous Panels,” Journal of Econometrics,2003, 115: 53- 74.
ISLAM, A. M. "Wagner’s Law Revisited: Cointegration and Exogeneity Tests for the USA" Applied Economics Letter, 2001, 8(8):509-15.
KAO, Chihwa and CHIANG, Min-Hsien “On the Estimation and Inference of a Cointegrated Regression in Panel Data,” Nonstationary Panels, Panel Cointegration and Dynamic Panels 2000, Vol.15: 179-222.
KEYNES, J.M. General Theory of Employment, Interest and Money, London: Macmillan. 1936
LAMARTINA,S., ZAGHINI,A. “Increasing Public Expenditures: Wagner’s Law in OECD Countries”, Center for Financial Studies Working Paper No. 2008/13.
LANDAU, D. “Government Expenditure and Economic Growth: A Cross-Country Study” Southern Economic Journal, 1983, 49(3), pp.783–792.
LEVIN, Andrew, LIN, Chien - Fu and James Chia-Shang CHU. “Unit Root Tests in Panel Data: Asymptotic and Finite-Sample Properties,” Journal of Econometrics, 2002, 108: 1-24.
MADDALA, G. S. and WU, Shaowen. “A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test,” Oxford Bulletin of Economics and Statistics Special Issue, 1999, 0305-9049.
MANN, A. J. "Wagner's Law: An Econometric Test for Mexico, 1925-76" National Tax Journal, 1980, 33(2): 189-201. MARK, C., SUL, D. ”Cointegration Vector Estimation by Panel DOLS and Long Run Money Demand”. Oxford Bulletin of Economics and Statisics, 65, No. 5, 2003.
MICHAS, N.A. “Wagner’s Law of Public Expenditure: What is the Appropriate Measurement for a Valid Test?” Public Finance, 1975, 30(1): 77-85.
MUSGRAVE, R. A. Fiscal Systems. New Haven and London: Yale University Press, 1969.
PEACOCK, A. and WISEMAN, J. The Growth of Public Expenditure in the United Kingdom, New Edition, London: George Allen &Unwin Ltd. 1967.
PRYOR, Frederic L. Public Expenditures in Communist and Capitalist Nations. Homewood, IL: Richard D Irwin. 1968.
RAM, R. “Causality Between Income and Government Expenditure: A Broad International Perspective” Public Finance, 1986, 41: 393-413.
REHMAN, J.” Cointegration-Causality Analysis between Public Expenditures and Economic Growth in Pakistan”, European Journal of Social Sciences, 13(4), 2010.
SINGH, B. and SAHNI, B. S. “Causality between Public Expenditure and National Income” The Review of Economics and Statistics, 1984, 66(4): 630-644.
THORNTON, J. "Cointegration, Causality and Wagner’s Law in 19th Century Europe" Applied Economics Letters, 1999, 6(7): 413-16.
YAMAK, R. Zengin, A. (1997). “Kalman Filtre Yöntemi ve Wagner Yasası: Türkiye Örneği, 1950-1994”, The Journal of Economics, Business and Finance, Number:133, Volume:12, pp:32-43.
YOLCU, D. “Enflasyon Hedeflemesinin Etkinliği ve Ekonomik Gelişmişlik Arasındaki İlişki”. Pamukkale University, The Institute of Social Sciences Master’s Thesis, Economics, 2007, Denizli.
VERMA, S., ARORA R.“Does the Indian Economy Support Wagner’s Law? An Econometric Analysis”, Eurasian Journal of Business and Economics, 2010, 3(5),77-91
WAGNER, A.”Three Extracts on Public Finance”, in R. A. Musgrave and A. T. 1883.
Other Sources
Penn World Table, on 1th October 2010, http://pwt.econ.upenn.edu/php_site/pwt63/pwt63_form.php
United Nations Data Retrieval System (Undata), on 23rd September 2010, http://data.un.org/