Wagner's Law - A Spurious Relationship?

Public Finance, Vol. 46, No. 3, 1993

15 Pages Posted: 6 Jul 2007

See all articles by Magnus Henrekson

Magnus Henrekson

Research Institute of Industrial Economics (IFN)

Abstract

Wagner's Law, the proposition that there is a long-run tendency for the public sector to grow relative to national income, has become a stylized fact in public finance. Numerous empirical studies have found strong support for the Law, particularly in a time-series framework. In this paper it is argued that these findings are likely to be spurious, because they have been performed on non-stationary variables that are not cointegrated. In the paper Swedish data for the period 1861-1990 are used.

Keywords: Wagner's Law, Government spending, Public finance

JEL Classification: H10, H50

Suggested Citation

Henrekson, Magnus, Wagner's Law - A Spurious Relationship?. Public Finance, Vol. 46, No. 3, 1993. Available at SSRN: https://ssrn.com/abstract=998269

Magnus Henrekson (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 55665
Grevgatan 34
Stockholm, SE-10215
Sweden
+46-8-6654502 (Phone)
+46-8-6654599 (Fax)

HOME PAGE: http://www.ifn.se/mh

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