Does the Wagner’s hypothesis hold for China? Evidence from static and dynamic analyses
China witnessed an admirable growth performance over the last three decades. It is claimed that such success was achieved by strong support from government expenditures. This study examines the relationship between government expenditures and GDP growth for China within the context of Adolp...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Economists' Association of Vojvodina
2016-01-01
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| Series: | Panoeconomicus |
| Subjects: | |
| Online Access: | http://www.doiserbia.nb.rs/img/doi/1452-595X/2016/1452-595X1601045A.pdf |
| _version_ | 1818171659893342208 |
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| author | Atasoy Burak Sencer Gür Timur Han |
| author_facet | Atasoy Burak Sencer Gür Timur Han |
| author_sort | Atasoy Burak Sencer |
| collection | DOAJ |
| description | China witnessed an admirable growth performance over the last three decades.
It is claimed that such success was achieved by strong support from
government expenditures. This study examines the relationship between
government expenditures and GDP growth for China within the context of Adolph
Wagner’s Hypothesis. It covers the most recent time period between 1982 and
2011 and use advanced static and dynamic econometric models to test validity
of the Hypothesis for Chinese economy. After determining the stationarity of
the series and confirm the existence of the long term relationship between
the variables by using the Bounds test approach, we examine the long and
short run relationship between government expenditures and GDP using an ARDL
model. The ARDL (1, 2) model suggests that 1 percentage point increase in GDP
will lead to 1.63 percentage points surge in government expenditures.
Finally, we use the Kalman filter to investigate the dynamic relationship
between government expenditures and GDP. According to the Kalman filter
model, the income elasticity of government expenditures remains between 1.32
and 1.38. Since the elasticity is found larger than 1 in both static and
dynamic models, we conclude that Wagner’s Hypothesis is valid for China
during the 1982-2011 period. |
| first_indexed | 2024-12-11T19:00:14Z |
| format | Article |
| id | doaj.art-bbd6bda4a9a340b88651215332bd3e27 |
| institution | Directory Open Access Journal |
| issn | 1452-595X 2217-2386 |
| language | English |
| last_indexed | 2024-12-11T19:00:14Z |
| publishDate | 2016-01-01 |
| publisher | Economists' Association of Vojvodina |
| record_format | Article |
| series | Panoeconomicus |
| spelling | doaj.art-bbd6bda4a9a340b88651215332bd3e272022-12-22T00:54:02ZengEconomists' Association of VojvodinaPanoeconomicus1452-595X2217-23862016-01-01631456010.2298/PAN1601045A1452-595X1601045ADoes the Wagner’s hypothesis hold for China? Evidence from static and dynamic analysesAtasoy Burak Sencer0Gür Timur Han1Undersecretariat of Treasury, TurkeyHacettepe University, Department of Economics, TurkeyChina witnessed an admirable growth performance over the last three decades. It is claimed that such success was achieved by strong support from government expenditures. This study examines the relationship between government expenditures and GDP growth for China within the context of Adolph Wagner’s Hypothesis. It covers the most recent time period between 1982 and 2011 and use advanced static and dynamic econometric models to test validity of the Hypothesis for Chinese economy. After determining the stationarity of the series and confirm the existence of the long term relationship between the variables by using the Bounds test approach, we examine the long and short run relationship between government expenditures and GDP using an ARDL model. The ARDL (1, 2) model suggests that 1 percentage point increase in GDP will lead to 1.63 percentage points surge in government expenditures. Finally, we use the Kalman filter to investigate the dynamic relationship between government expenditures and GDP. According to the Kalman filter model, the income elasticity of government expenditures remains between 1.32 and 1.38. Since the elasticity is found larger than 1 in both static and dynamic models, we conclude that Wagner’s Hypothesis is valid for China during the 1982-2011 period.http://www.doiserbia.nb.rs/img/doi/1452-595X/2016/1452-595X1601045A.pdfWagner’s hypothesisChinaGovernment expendituresARDLKalman filter |
| spellingShingle | Atasoy Burak Sencer Gür Timur Han Does the Wagner’s hypothesis hold for China? Evidence from static and dynamic analyses Panoeconomicus Wagner’s hypothesis China Government expenditures ARDL Kalman filter |
| title | Does the Wagner’s hypothesis hold for China? Evidence from static and dynamic analyses |
| title_full | Does the Wagner’s hypothesis hold for China? Evidence from static and dynamic analyses |
| title_fullStr | Does the Wagner’s hypothesis hold for China? Evidence from static and dynamic analyses |
| title_full_unstemmed | Does the Wagner’s hypothesis hold for China? Evidence from static and dynamic analyses |
| title_short | Does the Wagner’s hypothesis hold for China? Evidence from static and dynamic analyses |
| title_sort | does the wagner s hypothesis hold for china evidence from static and dynamic analyses |
| topic | Wagner’s hypothesis China Government expenditures ARDL Kalman filter |
| url | http://www.doiserbia.nb.rs/img/doi/1452-595X/2016/1452-595X1601045A.pdf |
| work_keys_str_mv | AT atasoyburaksencer doesthewagnershypothesisholdforchinaevidencefromstaticanddynamicanalyses AT gurtimurhan doesthewagnershypothesisholdforchinaevidencefromstaticanddynamicanalyses |