Comment on causality testing of the Wagner's law. Atlantic Economic Journal | March 1, 1989| | COPYRIGHT 1989 Atlantic Economic Society. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information) Copyright

Comment on Causality Testing of the Wagner's Law

The basic thrust of Wagner's law is that the relative size of the public sector in the economy (G/GDP) has an inherent tendency to grow as per capita income (GDP/POP) increases. It is fair to say, on balance, that most of the time-series studies have found the ratio-income-elasticity coefficients to be positive and statistically significant, by using: G/GDP = a + B(GDP/POP) + ui . (1) Thus, Wagner's law has been validated, particularly for the countries in the process of transition from a rural-agricultural to an ...

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