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Book part
Publication date: 19 February 2020

Richard Sturn

This chapter discusses the evolution of German views on public debt 1850–1920, referring to three strands of secondary literature: (1) German retrospectives on public…

Abstract

This chapter discusses the evolution of German views on public debt 1850–1920, referring to three strands of secondary literature: (1) German retrospectives on public finance, (2) the historical literature with a public choice perspective, and (3) contributions to public/constitutional law, mainly referring to Lorenz von Stein. The skeptic view of public debt endorsed by authors of the second half of the period is shown to be related to politico-economic issues of state agency combined with new state functions, rather than to the rejection of Dietzel’s Proto-Keynesian macroeconomic reasoning.

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Research in the History of Economic Thought and Methodology: Including a Symposium on Public Finance in the History of Economic Thought
Type: Book
ISBN: 978-1-83867-699-5

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Article
Publication date: 4 March 2019

Joao Jalles

The purpose of this paper is to assess the responses of different categories of government spending to changes in economic activity. In other words, the authors…

Abstract

Purpose

The purpose of this paper is to assess the responses of different categories of government spending to changes in economic activity. In other words, the authors empirically revisit the validation of the Wagner’s law in a sample of 61 advanced and emerging market economies between 1995 and 2015.

Design/methodology/approach

The authors do so via panel data instrumental variables and time-series SUR approaches.

Findings

Evidence from panel data analyses show that the Wagner’s law seems more prevalent in advanced economies and when countries are growing above potential. However, such result depends on the government spending category under scrutiny and the functional form used. Country-specific analysis revealed relatively more cases satisfying Wagner’s proposition within the emerging markets sample. The authors also found evidence of counter-cyclicality in several spending items. All in all, the Wagner’s regularity seems more the exception than the norm.

Originality/value

While in the literature on the size of the public sector with respect to a country’s level of economic development has received much attention, the authors make several novel contributions: since some economists criticized Wagner’s law because of ambiguity of the measurement of government expenditure (Musgrave, 1969), instead of looking at aggregate public expenditures, the authors go much more granular into the different functions of government (to this end, the authors use the Classification of Functions of the Government nomenclature). The authors check the validity of the Law via an instrumental variable approach in a panel setting; after that, the authors take into account the phase of the business cycle using a new filtering technique to compute potential GDP (output gap); then, the authors cross-check the baseline results by considering alternative functional form specifications of the Law; and finally, the authors look at individual countries one at the time via SUR analysis.

Details

Journal of Economic Studies, vol. 46 no. 2
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 9 November 2020

Noha Hesham Ghazy, Hebatallah Ghoneim and Dimitrios Paparas

One of the main theories regarding the relationship between government expenditure and gross domestic product (GDP) is Wagner’s law. This law was developed in the…

Abstract

Purpose

One of the main theories regarding the relationship between government expenditure and gross domestic product (GDP) is Wagner’s law. This law was developed in the late-19th century by Adolph Wagner (1835–1917), a prominent German economist, and depicts that an increase in government expenditure is a feature often associated with progressive states. This paper aims to examine the validity of Wagner’s law in Egypt for 1960–2018. The relationship between real government expenditure and real GDP is tested using three versions of Wagner’s law.

Design/methodology/approach

To test the validity of Wagner in Egypt, law time-series analysis is used. The methodology used in this paper is: unit-root tests for stationarity, Johansen cointegration approach, error-correction model and Granger causality.

Findings

The results provide strong evidence of long-term relationship between GDP and government expenditure. Moreover, the causal relationship is found to be bi-directional. Hence, this study provides support for Wagner’s law in the examined context.

Research limitations/implications

It should be noted, however, that there are some limitations to this study. For instance, in this paper, the government’s size was measured through government consumption expenditure rather than government expenditure due to data availability, which does not fully capture the government size. Moreover, the data available was limited and does not fully cover the earliest stages of industrialization and urbanization for Egypt. Furthermore, although time-series analysis provides a more contextualized results and conclusions, the obtained conclusions suffer from their limited generalizability.

Originality/value

This paper aims to specifically make a contribution to the empirical literature for Wagner’s law, by testing the Egyptian data using time-series econometric techniques for the longest time period examined so far, which is 1960–2018.

Details

Review of Economics and Political Science, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2356-9980

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Book part
Publication date: 17 October 2014

Marta Podemska-Mikluch

The recurring implementation and continuous maintenance of price controls implies a deep incongruence between public policy and economic common sense. Yet, economists do…

Abstract

The recurring implementation and continuous maintenance of price controls implies a deep incongruence between public policy and economic common sense. Yet, economists do not tire of concluding their papers with policy recommendations as if oblivious to the ineffectiveness of their efforts. By assuming that policy is an object of choice, economists have no alternative but to naively hope for a decision-maker sensitive to economic logic. An alternative approach is to think of policy, not as an object of choice but as an outcome of a competitive process. From this perspective, the often-lamented disregard for economic principles is not a characteristic of a deficient policymaker, but a systemic quality of institutional arrangements. I illustrate my argument with the analysis of the implementation of rigid prices for reimbursed pharmaceuticals in Poland.

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Entangled Political Economy
Type: Book
ISBN: 978-1-78441-102-2

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Article
Publication date: 6 September 2011

Saeid Mahdavi

This paper seeks to examine the validity of Wagner's Law using annual data (1957‐2006) for the US state‐local government (SLG) real expenditure and eight of its sub‐categories.

Abstract

Purpose

This paper seeks to examine the validity of Wagner's Law using annual data (1957‐2006) for the US state‐local government (SLG) real expenditure and eight of its sub‐categories.

Design/methodology/approach

The co‐integration tests of Johansen and the bounds testing approach to co‐integration proposed by Pesaran et al. were carried out to determine whether a long‐term equilibrium relationship existed between real per capita GDP (pcgdp) and the expenditure variables scaled by real GDP. The income elasticity coefficients of the expenditure variables were then estimated. The direction of causality was tested in the context of error‐correction models (ECM) and the Toda‐Yamamoto approach, which allows for estimating level relationships without pre‐testing for unit roots.

Findings

Most SLG expenditure variables were found to be non‐stationary and income‐elastic. However, with the exception of total expenditure (te), insurance trust benefits (ins) and social services and income maintenance (ssim), no other non‐stationary expenditure variable was co‐integrated with pcgdp and error‐corrected over time. The ECM results suggested that te, ins and ssim were driven by pcgdp, consistent with a Wagnerian causal ordering. The Toda‐Yamamoto approach, however, indicated that in these and a few other cases the causal effect was bidirectional.

Originality/value

This paper provides a fairly comprehensive test of Wagner's Law at the US sub‐national government level with an emphasis on the concepts of co‐integration and (long‐run) causality in the income‐expenditure nexus. Its findings underscore the importance of using disaggregated expenditure measures to test Wagner's Law, as they suggest that some, but not all, rapidly growing and non‐stationary expenditure sub‐categories were decoupled from pcgdp in the long run.

Details

Journal of Economic Studies, vol. 38 no. 4
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 1 November 1998

Birger P. Priddat

Analysing the values theories of the nineteenth century, there is a remarkable difference between German and English theories: the idea of subjective value is a very…

Abstract

Analysing the values theories of the nineteenth century, there is a remarkable difference between German and English theories: the idea of subjective value is a very German idea, from the beginning of the nineteenth century, ignored by textbooks of the history of economic thought. The German conception of subjective value is subjective, but not individualistic, and is different from the marginalistic conception of value later on. In the German tradition ‐ Hufeland, Lotz, Rau, Hermann, Knies, Wagner, etc. ‐ the value theory deals with “meaning”. The economic actor is able to choose subjectively, but in the context of a collective meaning. We get some new insights into the very German idea of a social economy.

Details

International Journal of Social Economics, vol. 25 no. 10
Type: Research Article
ISSN: 0306-8293

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Book part
Publication date: 17 October 2014

Maria Pia Paganelli

Entangled Political Economy, the idea that the economy and the polity are a nexus of interrelations often with unplanned outcomes, is close to the concept of economics…

Abstract

Entangled Political Economy, the idea that the economy and the polity are a nexus of interrelations often with unplanned outcomes, is close to the concept of economics that Adam Smith presents, a concept which was not shaped by strict discipline barriers. I show that Adam Smith analyzes the nature and causes of the wealth of nations by analyzing the interaction of the economy with politics, ethics, and the law. In particular, Smith presents each of these systems as a network of relations with all the other systems: the economy is entangled not just with the polity, but also with other systems of behavior such as the law and morality. Adam Smith may help expand the horizons of the entangled political economy analysis and the explanatory powers of economics.

Details

Entangled Political Economy
Type: Book
ISBN: 978-1-78441-102-2

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Article
Publication date: 1 August 2002

Wolfgang Drechsler

The essay narrates and analyzes Eugen Dühring’s remotion, i.e. the taking away of his status as Privatdozent, and thereby of his right to teach at a university, by the…

Abstract

The essay narrates and analyzes Eugen Dühring’s remotion, i.e. the taking away of his status as Privatdozent, and thereby of his right to teach at a university, by the Prussian Minister of Culture in 1877. After sketching out the background of the University of Berlin, the institution of Privatdozent, and Dühring himself, first, Dühring’s 1875 clash with Adolph Wagner is described, which put him on “probation”. Then, the 1877 scandal is looked at in detail, and the accusations against Dühring by the Faculty of Philosophy – mainly libel and insult – checked against the facts. It is argued that, while there might have been a point in Dühring’s charge of plagiarism against the physicist Helmholtz regarding the first law of thermodynamics, Dühring was generally guilty as charged, and that his remotion was certainly legal. As far as the legitimacy of this harsh measure is concerned, the case is less clear, but in the end, it is claimed that the remotion was legitimate as well.

Details

Journal of Economic Studies, vol. 29 no. 4/5
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 25 January 2008

Hassan Mohammadi, Murat Cak and Demet Cak

The aim of this paper is to prove the validity of Wagner's hypothesis.

Abstract

Purpose

The aim of this paper is to prove the validity of Wagner's hypothesis.

Design/methodology/approach

The paper examines the validity of Wagner's hypothesis with annual data for Turkey over 1950‐2005 period.

Findings

The empirical results using the ARDL bounds tests of cointegration provide strong support for the hypothesis. Also, the results are robust across six alternative specifications of the Wagner's hypothesis as well as four alternative lag length selection criterions.

Originality/value

The paper provides useful information on the validity of Wagner's hypothesis.

Details

Journal of Economic Studies, vol. 35 no. 1
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 1 March 1985

Tomas Riha

Nobody concerned with political economy can neglect the history of economic doctrines. Structural changes in the economy and society influence economic thinking and…

Abstract

Nobody concerned with political economy can neglect the history of economic doctrines. Structural changes in the economy and society influence economic thinking and, conversely, innovative thought structures and attitudes have almost always forced economic institutions and modes of behaviour to adjust. We learn from the history of economic doctrines how a particular theory emerged and whether, and in which environment, it could take root. We can see how a school evolves out of a common methodological perception and similar techniques of analysis, and how it has to establish itself. The interaction between unresolved problems on the one hand, and the search for better solutions or explanations on the other, leads to a change in paradigma and to the formation of new lines of reasoning. As long as the real world is subject to progress and change scientific search for explanation must out of necessity continue.

Details

International Journal of Social Economics, vol. 12 no. 3/4/5
Type: Research Article
ISSN: 0306-8293

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