An attempt to restore Wagner's law of increasing state activity

Konya, L and Abdullaev, B 2018, 'An attempt to restore Wagner's law of increasing state activity', Empirical Economics, vol. 55, no. 4, pp. 1569-1583.

Document type: Journal Article
Collection: Journal Articles

Title An attempt to restore Wagner's law of increasing state activity
Author(s) Konya, L
Abdullaev, B
Year 2018
Journal name Empirical Economics
Volume number 55
Issue number 4
Start page 1569
End page 1583
Total pages 15
Publisher Springer
Abstract According to Adolph Wagner's Law of Increasing State Activity economic development is accompanied by an increasing role of state activities and functions. Unfortunately, this view has never been stated explicitly by Wagner and the lack of a precise mathematical formulation led researchers to use various and sometimes incomparable specifications. Moreover, in previous empirical studies state activity was almost always replaced by public spending, and hence Wagner's Law was effectively narrowed down to the Law of Increasing State Spending. This paper is an attempt to restore Wagner's Law. Contrary to previous studies, it examines whether Wagner's Law in its original form held in Australia in the 1901-2008 period by studying the relationship between real per capita income and a composite variable of state activity that takes both financial and legislative activities of the federal government into account. Although this composite variable still falls short of capturing all levels and sorts of state or government activities, it is a far more comprehensive measure than any of its components used individually in earlier studies. The results based on this composite measure provide no empirical evidence in favour of Wagner's Law in Australia.
Subject Economics not elsewhere classified
Keyword(s) Australia
Economic development
State activity
Wagner's law
DOI - identifier 10.1007/s00181-017-1339-x
Copyright notice © Springer-Verlag GmbH Germany 2017
ISSN 0377-7332
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