TESTING WAGNER’S LAW FOR MACEDONIA: EVIDENCE FROM CAUSALITY ANALYSIS

Musliu, Jehona and Xhaferi, Besa and Musliu, Asllan (2018) TESTING WAGNER’S LAW FOR MACEDONIA: EVIDENCE FROM CAUSALITY ANALYSIS. Economic Vision, International Scientific Journal in Economics, Finance, Business, Marketing, Management and Tourism, 5 (9-10). pp. 62-68. ISSN 2545-4544

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Abstract

The increasing trend of government expenditure calls for research on impact of public finance policies on growth. Two competing views on relationship between expenditure and economic growth, namely Wagner’s Law and Keynesian approach, and empirical evidence in favor for each of them increased the interest of researches to examine theoretically and empirically for different countries. The purpose of this study is to analyze the relationship between expenditure and economic growth in Macedonia and provide evidence for one of these competing views. The methodology used is co-integration, causality and error correction model. This methodology is employed for quarterly data on Macedonia for the period 2005-2015.The data are obtained from State Statistical Office of Republic of Macedonia and from National Bank of Republic of Macedonia. Causality between government expenditures and economic growth was examined using the Granger causality test. The result suggests that output measures Granger cause expenditure thereby providing evidence supporting Wagner’s Law. Policymakers should be careful about adopting public spending as a policy tool to stimulate the economy.

Item Type:	Article
Subjects:	H Social Sciences > H Social Sciences (General)
Divisions:	Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User:	Unnamed user with email zshi@unite.edu.mk
Date Deposited:	05 Jun 2019 08:25
Last Modified:	05 Jun 2019 08:25
URI:	http://eprints.unite.edu.mk/id/eprint/45

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