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A test of the Wagner's hypothesis for the Fiji Islands

Narayan, Paresh Kumar, Prasad, Arti and Singh, Baljeet 2008, A test of the Wagner's hypothesis for the Fiji Islands, Applied economics, vol. 40, no. 21, pp. 2793-2801.

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Title A test of the Wagner's hypothesis for the Fiji Islands
Author(s) Narayan, Paresh Kumar
Prasad, Arti
Singh, Baljeet
Journal name Applied economics
Volume number 40
Issue number 21
Start page 2793
End page 2801
Publisher Routledge
Place of publication London, England
Publication date 2008-11
ISSN 0003-6846
1466-4283
0960-3107
1350-4851
Summary In this article we examine Wagner's law for Fiji for the period 1970 to 2002. Using the Johansen (1988) test for cointegration, we find one cointegration relationship between national output and government expenditure. Using five different long run estimators, we find robust results on the impact of national income on government expenditure. The elasticity ranges from 1.36 to 1.44, implying that a 1% increase in income leads to a 1.36-1.44% increase in government expenditure. Moreover, we find that in the long run national income Granger causes government expenditure. While these results are consistent with Wagner's law, we warn policy makers that because Fiji's total debt stands at around 69% of GDP, in future the bulk of expenditure will go towards debt financing at the expense of productive sectors.
Language eng
Field of Research 140299 Applied Economics not elsewhere classified
HERDC Research category C1 Refereed article in a scholarly journal
HERDC collection year 2008
Copyright notice ©2008, Taylor & Francis
Persistent URL http://hdl.handle.net/10536/DRO/DU:30017865

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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