Testing ًًWagner's hypothesis : the case of Jordan

Abstract EN

The long run relationship between economic growth and government expenditure, known as, Wagner's law, has attracted considerable attention from academics, and policy makers.

It has been tested using both time series and cross-sectional data.

There has been controversial and the empirical results were mixed.

The purpose of this paper is to analyze public expenditure growth in Jordan.

Mainly, the study investigates the validity of Wagner's law for Jordan over the period 19(57-2005.

To examine statistically the existence of a long-run relationship between government expenditure and real GNP, the paper uses cointegration methodology and causality techniques.

In the light of the empirical evidence provided for Jordan in this paper using advance time-series, it is clear that Wagner's law does hold in the case of Jordan.