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The validity of "augmented" Wagner's Law is evaluated using a sample of twelve OECD countries over the period of 1995–2015. The bootstrap panel Granger causality approach is utilized to detect the direction of causality between government spending and GDP, focusing on cross-sectional dependence, slope heterogeneity, and structural breaks. The results show a causal relationship in favor of Wagner's Law in seven countries, thus GDP is long-run forcing to government expenditures and that the causality runs from the former to the latter variable. The policy implication of the findings is that the upholding of Wagner's Law in the presence of aging population growth and increasing demand for welfare services may force policy makers to raise taxes or it leads to excessive borrowing which might affect sustainability of public finances. [ABSTRACT FROM AUTHOR]

Abstract: Wagner''s Law is the first model of public spending in the history of public finance. The aim of this study is to assess its empirical evidence in Italy for the period 1960–2008 at a disaggregated level, using a time series approach. After a brief introduction, a survey of the economic literature on this issue is shown, before estimating the specifications of Wagner''s Law for some specific items of public spending (for interests, for final consumption, for labor dependent income, for grants on production, and for public investments), according to the Bank of Italy classification. We found a cointegration relationship for three out of five items. Moreover, results from Granger causality tests show evidence in favor of Wagner''s Law only for passive interests spending in the long-run, and for dependent labor income spending in the short-run. Some notes on the policy implications of our empirical results conclude the paper. [Copyright &y& Elsevier]

Abstract: Previous studies generally find mixed empirical evidence on the relationship between government spending and economic growth. In this paper, we re-examine the causal relationship between government expenditure and economic growth by conducting the panel Granger causality test recently developed by and by utilizing a richer panel data set which includes 182 countries that cover the period from 1950 to 2004. Our empirical results strongly support both Wagner''s law and the hypothesis that government spending is helpful to economic growth regardless of how we measure the government size and economic growth. When the countries are disaggregated by income levels and the degree of corruption, our results also confirm the bi-directional causality between government activities and economic growth for the different subsamples of countries, with the exception of the low-income countries. It is suggested that the distinct feature of the low-income countries is likely owing to their inefficient governments and inferior institutions. [Copyright &y& Elsevier]

Rodrik’s hypothesis is defined as the positive association between an economy’s foreign trade exposure and the size of its government. “Wagner’s law” is said to hold when government spending grows in proportion to output. The objective of this paper is to determine whether the government transfers to farmers in the United States between 1965 and 1995, considering major program crops such as wheat, cotton, and feed grains, were a product of the development of foreign markets for these commodities, a product of “Wagner’s law,” or a product of the protection of low-income farmers and political interest groups lobbying. Factors that explain these government spending patterns are protection of low-income farmers and the influence of political (lobbying) groups. [Copyright &y& Elsevier]