Causality between Government Expenditure and GDP in the Libya Economy
Keywords:
government expenditure, GDP, Causality, cointegrationAbstract
his paper used the recent advances in econometric techniques and examines Wagner Law of the long–run relationship between government expenditure and gross domestic product (GDP) for the Libyan economy covering the period 1962-2008. Stationarity and unit roots tests indicate that government expenditure and GDP in our sample are non-stationary in the levels but are first – difference stationary. The cointegration test shows that the long- run relationship between the variables and cointegrated. Then the causality must run from GDP to public expenditure, the results indicate unidirectional causation running from GDP to public expenditure. Thus, our findings seem to support the existence of Wagner low in this study on some variables.
References
Al-Faris, A. F. (2002) "Public Expenditure and Economic Growth in the Gulf Cooperation Council Countries," Applied Economics, 34, (7).
AL-Obaid, h. A. (2004)."Rapidly Changing Economic Environments and Wagner’s Law: The case of Saudi Arabia". PhD. Dissertation, Fort Collins, CO: Colorado State University
Brooks, C. (2008). Introductory Econometrics for Finance. 2nd editions, Cambridge University
Chang, T. (2002). “An Econometric Test of Wagner’s Law for six Countries based on Co-integration and Error-Correction Modelling Techniques”, Applied Economics.
Enders, Walter (1998). Applied Econometric time – Series, New York, John Wiley and Sons.
Engle, R.E. and Granger, C.W.J. (1987). "Cointegration and Error Correction: Representation, Estimation and Testing". Econometrica 55(2), 251-276.
Getzler, J. (2000). “Law, History and the Social Sciences: Intellectual Traditions of the Late 19th and Early 20th Century Europe”.
Henrekson, M. (1992). An Economic Analysis of Swedish Government Expenditure. Avebury.
Islam, A. M. (2001). “Wagner’s Law Revisited: Cointergration and Exogeneity Tests for the USA,” Applied Economic Letters, 8,509-515.
Keynes, J M. (1936). The General Theory of Employment, Interest and Money. New York: Harcourt, Brace.
Musgrave, R. A. (1969). Fiscal Systems. New Haven and London: Yale University Press.
Murthy, N. R. V. (1994). “Wagner’s Law, Spurious in Mexico or Misspecification: A Reply,” Public Finance / Finances Published, 49,295-303. 13- Ram, R (1987). "Wagner's Hypothesis in Time Series and Crosssection Perspective: evidence from Real data for 115 Countries' ' review of Economics and Statistic, 69, 194-204.
Yun, Wing. (2005). "Government Size and Economic Growth: Time-Series Evidence for the United Kingdom, 1830- 1993" Working Paper. Department of Economics, University of Victoria, January, 2005.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2016 Journal of Economic and Political Sciences
This work is licensed under a Creative Commons Attribution 4.0 International License.
