An empirical re-examination of Wagner's law

Abizadeh, Sohrab; Yousefi, Mahmood

doi:10.1016/0165-1765(88)90035-3

Cited by 33 publications

(19 citation statements)

References 5 publications

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“…This study sheds new light on the voluminous previous empirical works on Wagner's law in the following respects. First, to the best of our knowledge, the present study is first attempt to investigate the law for U.S. and German states, with the exception of Abizadeh and Yousefi (1988), who study 10 U.S.…”

Section: Resultsmentioning

confidence: 99%

“…With the exception of Abizadeh and Yousefi (1988), who study 10 U.S. states, our study differs from all others in that state-level data from the United States and Germany are utilized to test the law. Unlike Abizadeh and Yousefi (1988), the present empirical method is based on cointegration analysis and incorporates extended panel data techniques, as in many recent predecessors.…”

Section: Expendituresmentioning

confidence: 99%

“…Unlike Abizadeh and Yousefi (1988), the present empirical method is based on cointegration analysis and incorporates extended panel data techniques, as in many recent predecessors. Excluding Narayan, Nielsen, and Smyth (2008) and Narayan, Rath, and Narayan (2012), this study is the first to apply the panel cointegration approach to test the law, while almost all previous studies use time-series data.…”

Section: Expendituresmentioning

confidence: 99%

“…4 While almost all researchers investigate the law using national-level data, a recent direction in Wagner's law literature focuses on validity at the subnational or state level. Abizadeh and Yousefi (1988) produced the first paper to employ state-level data to test the law. Abizadeh and Yousefi use time-series data for 10 U.S. states for the period 1950 to 1984, and their results support the law.…”

Section: Introductionmentioning

confidence: 99%

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Wagner’s law, fiscal discipline, and intergovernmental transfer: empirical evidence at the US and German state levels

Funashima

Hiraga

2017

Int Tax Public Finance

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Does fiscal discipline restrain government from increasing its budget size? To answer this question, this paper investigates whether Wagner's law is satisfied for two types of states: U.S. states, in which fiscal sovereignty is established, and German states, in which fiscal transfer dependence is high and budget constraints are softened. In U.S. states, we demonstrate that Wagner's law is validated, while some of the balanced budget requirements weaken the validity of the law. In German states, we find an "inverse" law, especially after the bailouts of Bremen and Saarland. The "inverse" law is a new channel of growth in government size, and means that soft budget constraints cause significant negative correlation between government size and output. These results are robust regardless of whether intergovernmental fiscal transfers are taken into account, while they quantitatively change the validity of the law.Our findings imply that the characteristics of fiscal discipline are prime determinants of the channel and degree of growth in government size. JEL Classification Codes: H72, C23

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Section: Resultsmentioning

confidence: 99%

Section: Expendituresmentioning

confidence: 99%

Section: Expendituresmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Wagner’s law, fiscal discipline, and intergovernmental transfer: empirical evidence at the US and German state levels

Funashima

Hiraga

2017

Int Tax Public Finance

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“…In fact, this unilateral directionality hypothesis is empirically sustained by many works in different international contexts (among them Gandhi, 1971;Ganti and Kollury, 1979;Ahsan et al, 1996;Ram, 1987;Abizadeh and Yousefi, 1988;Henrekson, 1993;Vasudeva Murthy, 1993;Oxley, 1994;Bairam, 1995;Thornton, 1999;Kolluri et al, 2000;Islam, 2001;and recently Sideris, 2007;Arpaia and Turrini, 2008;Kumar et al, 2009;Abdullah and Maamor, 2010;Magazzino, 2012a).…”

mentioning

confidence: 94%

Did fiscal institutions affect Wagner’s law in Italy during 1951–2009 period? An empirical analysis

2015

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In this article, we test Wagner’s assumption of the one-sided directional flow moving from economic growth to public spending in Italy for the 1951–2009 period. We pay particular attention to the impact of certain regime shifts related to changes in Italian budget regulations and procedures and the relevance of fiscal institutions to the fiscal performance equation, i.e. the public spending–national income nexus. The Error Correction Model is estimated to measure short-run dynamic effects and the long-run equilibrium between the two time series. The empirical evidence suggests that Wagner’s law is supported. In regard to policy implications, we find that public spending reacted less to positive changes in economic growth when the strengthening of the Ministry of Finance occurred in 1997 (Ciampi’s reform). Some sensitivity analyses confirm our empirical evidence

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Tort and Regulatory Law in Germany

Magnus

Bitterich

2007

Tort and Insurance Law

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An empirical re-examination of Wagner's law

Cited by 33 publications

References 5 publications

Wagner’s law, fiscal discipline, and intergovernmental transfer: empirical evidence at the US and German state levels

Wagner’s law, fiscal discipline, and intergovernmental transfer: empirical evidence at the US and German state levels

Did fiscal institutions affect Wagner’s law in Italy during 1951–2009 period? An empirical analysis

Tort and Regulatory Law in Germany

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