Testing for Structural Changes in the Wagner’s Law for a Sample of East Asian Countries

Kumar, S; Cao, Z

doi:10.1007/s00181-019-01686-5

Kumar, S; Cao, Z

Abstract

This paper examines the Wagner’s Law for a sample of East Asian countries (China, Hong Kong, Japan and South Korea) by utilizing the structural break methods viz., Gregory and Hansen (J Econom 70:99–126, 1996a; Oxf Bull Econ Stat 58:555–559, 1996b), Carrion-i-Silvestre and Sanso (Oxf Bull Econ Stat 68:623–646, 2006) and Bai and Perron (Econometrica 66:47–78, 1998; J Appl Econom 18:1–22, 2003). We find that there exists weak cointegrating relationship between the log of nominal public expenditure as a share of nominal GDP to the log of real per capita GDP. However, we find support for the Wagner’s Law when the relationship is extended to include a measure of the population structure—the dependency ratio. Our findings support the explanations suggested by Durevall and Henrekson (J Public Econ 95(7–8):708–722, 2011).

Keywords

Government spending; Dependency ratio; Cointegration; Structural breaks

Date

April 2, 2019

Source

Empirical Economics (2019). https://doi.org/10.1007/s00181-019-01686-5

Item Type

Journal Article

Publisher

Springer (part of Springer Nature)

DOI

10.1007/s00181-019-01686-5

Publisher's Version

https://link.springer.com/article/10.1007%2Fs00181-019-01686-5

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