Menu Expand



Jaén-García, M. A Review of Wagner’s Law with Disaggregated Data for Spain. Applied Economics Quarterly, 66(1), 65-92.
Jaén-García, Manuel "A Review of Wagner’s Law with Disaggregated Data for Spain" Applied Economics Quarterly 66.1, , 65-92.
Jaén-García, Manuel: A Review of Wagner’s Law with Disaggregated Data for Spain, in: Applied Economics Quarterly, vol. 66, iss. 1, 65-92, [online]


A Review of Wagner’s Law with Disaggregated Data for Spain

Jaén-García, Manuel

Applied Economics Quarterly, Vol. 66 (2020), Iss. 1 : pp. 65–92

Additional Information

Article Details


Author Details

Manuel Jaén-Garcia, Universidad de Almerìa, Carretera Sacramento s/n, 04120 La Canada de San Urbano, Almeria, Spain.


  1. Abizadeh, S./Gray, J. (1985): “Wagner’s Law: a pooled time-series, cross-section comparison,” National Tax Journal 38 (2), 209–218.  Google Scholar
  2. Akitoby, B./Clemens, B./Gupta, S./Inchauste, G. (2006): “Public spending, voracity and Wagner’s law in developing countries,” European Journal or Political Economy 22, 908–924.  Google Scholar
  3. Andic, S./Veverka, J. (1964): “The growth of government expenditure in Germany since the unification,” Finanzarchiv 23, 189–278.  Google Scholar
  4. Asseery, A. A./Law, D./Perdikis, N. (1999): “Wagner’s Law and public expenditure in Iraq: a test using disaggregated data,” Applied Economics Letters 6, 39–44.  Google Scholar
  5. Bird, R. M. (1971): “Wagner’s Law of expanding state activity,” Public Finance 26 (1), 1–26.  Google Scholar
  6. Biswal, B./Dhawan, U./Lee, H. (1999): “Testing Wagner versus Keynes using disaggregated public expenditure data for Canada,” Applied Economics 31, 1283–1291.  Google Scholar
  7. Burney, N. (2002): “Wagner’s hypothesis: Evidence from Kuwait using cointegration tests”. Applied Economics 34(1), 49–58.  Google Scholar
  8. Burney, N./Mussalam, N. (1999): “Wagner’s Law and public expenditure growth in Kuwait,” OPEC Review, June 1999, 139–171.  Google Scholar
  9. Carreras, A./Prados de la Escosura, L./Rosés, J. (2005): “Renta y riqueza,” In Estadísticas Históricas de España (eds. A. Carreras and X. Tafunell). Fundación BBVA. Madrid.  Google Scholar
  10. Chang, T. (2002): “An econometric test of Wagner’s Law for six countries based in cointegration and error-correction modeling techniques,” Applied Economics 34, 1157–1169.  Google Scholar
  11. Chang, T./Liu, W./Caudill, S. B. (2004): “A re-examination of Wagner’s Law for ten countries based on cointegration and error-correction modeling techniques,” Applied Financial Economics 14, 577–589.  Google Scholar
  12. Chletsos, M./Kollias, C. (1997): “Testing “Wagner’s Law” using disaggregated public expenditure data in the case of Greece: 1958–93,” Applied Economics 29: 371–77.  Google Scholar
  13. Comin, F./Diaz, D. (2005): “Sector público administrativo y estado del bienestar,” In Estadísticas Históricas de España (eds. A. Carreras and X. Tafunell). Fundación BBVA. Madrid.  Google Scholar
  14. Díaz-Fuentes, D./Revuelta, J. (2013): “La relación a largo plazo entre crecimiento económico y gasto público en España (1850–2000),” Investigaciones de Historia Económica, 9 (1), 32–42.  Google Scholar
  15. Durevall, D./Henrekson, M. (2011): “The futile quest for a grand explanation of long-run government expenditure,” Journal of Public Economics 95, 708–722.  Google Scholar
  16. Engle, R./Granger, C. (1987): “Cointegration and error correction: Representation, estimation and testing,” Econometrica 55, 251–276.  Google Scholar
  17. Gandhi, V. (1971): “Wagner’s Law of public expenditure: Do recent cross-section studies confirm it?” Public Finance 26 (1), 44–56.  Google Scholar
  18. Gemmell, N. (1993): “Wagner’s Law and Musgrave’s hypotheses,” In: The Growth of Public Sector (ed. N. Gemmell), E. Elgar P.L.  Google Scholar
  19. Gilles, D./Godwin, R. (2011): “Testing for Multivariate Cointegration in the Presence of Structural Breaks: p-Values and Critical Values,” Applied Economic Letters 19 (16), 1–8.  Google Scholar
  20. Goffmann, I. J. (1968): “On the empirical testing of Wagner’s Law: A technical note,” Public Finance 23(3), 359–64.  Google Scholar
  21. Goffmann, I. J./Maher, D. J. (1971): “The growth of public expenditures in selected developing nations: Six Caribbean countries,” Public Finance 26 (1), 1–26.  Google Scholar
  22. Gray, V. (1976): “Models of comparative state politics: a comparison of cross-sectional and time-series analysis,” American Journal of Political Science 20 (2) 235–256.  Google Scholar
  23. Gupta, S. (1967): “Public expenditure and economic growth: A time series analysis,” Public Finance, 22(4), 423–461.  Google Scholar
  24. Henning, J. A./Tussing, A. D. (1974): “Income elasticity of the demand for public expenditures in the United States,” Public Finance 29 (3–4), 325–341.  Google Scholar
  25. Henrekson, M. (1990): “Wagner’s Law,” In: An Economic Analysis of Swedish Government Expenditure (ed. M. Henrekson) UMI, Ann Arbor, USA.  Google Scholar
  26. Henrekson, M. (1993): “Wagner’s Law – A Spurious Relationship?” Public Finance 48 (2), 406–415.  Google Scholar
  27. Hondroyiannis, G./Papapetrou, E. (1995): “An examination of Wagner’s Law for Greece: A cointegration analysis,” Public Finance 50, 67–79.  Google Scholar
  28. Instituto Nacional de Estadística (several years): Contabilidad Nacional de España.  Google Scholar
  29. Intervención General de la Administración del Estado (several years): Contabilidad nacional. Clasificación funcional del gasto de las Administraciones Públicas (COFOG).  Google Scholar
  30. Jaén-García, M. (2011): “Empirical analysis of Wagner’s Law for the Spain’s regions,” International Journal of Academic Research in Accounting, Finance and Management Sciences 1(1) pp. 1–17.  Google Scholar
  31. Jaén-García, M. (2017): “An empirical study or Wagner’s Law applied to the Spanish case,” Presupuesto y Gasto Público 88, pp. 25–42.  Google Scholar
  32. Jaén, M./Molina, A. (1999): “Evidencia Empírica Adicional sobre la Ley de Wagner: España 1901–1992”. Hacienda Pública Española 148. 169–174.  Google Scholar
  33. Karagianni, S./Pempetzoglou, M./Strikou, S. (2002): “Testing Wagner’s Law for linear and no linear causality in the EU economies,” Journal of Applied Business Research 18(4), 107–115.  Google Scholar
  34. Kuckuck, J. (2014): “Testing Wagner’s Law at different stages of economic development,” Finanzarchiv/Public Finance Analysis 70 (1), 128–168.  Google Scholar
  35. Kucukkale, Y./Yamak, R. (2012): “Cointegration, causality and Wagner’s Law with disaggredated data: evidence from Turkey, 1968–2004,” MPRA, Online at http://mpra.ub.unimuenchen. de/36894/, MPRA Paper No. 36894, posted February 24, 2012, 15:27 UTC.  Google Scholar
  36. Lamartina, S./Zaghini, A. (2008): “Increasing public expenditures: Wagner’s Law in OECD countries,” CFS Working Paper Series 2008/13.  Google Scholar
  37. Legrenzi, G. (2000): “The long-run relationship between public sector size and economic growth: Income-elasticity and causality of the Italian general government expenditure (1861–1998),” International Review of Economics and Business 43 (3), 415–438.  Google Scholar
  38. Lowery, D./Berry, W. (1983): “The growth of governments in the United States: an empirical assessment of competing explanations,” American Journal of Political Science 21, 665–694.  Google Scholar
  39. Magazzino, C. (2011): “Disaggregated public spending, GDP and money supply: Evidence for Italy,” European Journal of Economics, Finance and Administrative Sciences 41, 118–131.  Google Scholar
  40. Magazzino, C. (2012 a): “Wagner versus Keynes: Public Spending and National Income in Italy at a Disaggregated Level,” Journal of Policy Modeling 34 (6), 890–905.  Google Scholar
  41. Magazzino, C. (2012 b): “Wagner’s Law and Augmented Wagner’s Law in EU-27. A Time-Series Analysis on Stationarity, Cointegration and Causality,” International Research Journal of Finance and Economics 89, 205–220.  Google Scholar
  42. Magazzino, C./Giolli, L./Mele, M. (2015): “Wagner’s Law and Peacock and Wiseman’s Displacement Effect in European Union Countries: A Panel Data Study,” International Journal of Economics and Financial Issues 5 (3), 812–819.  Google Scholar
  43. Mann, A. J. (1980): “Wagner’s Law: An econometric test for Mexico, 1925–1976,” National Tax Journal 33(2), 189–201.  Google Scholar
  44. Martin, A./Lewis, W. A. (1956): “Structures of public revenues and expenditures”. Manchester School of Economic and Social Studies 24, 203–232.  Google Scholar
  45. Michas, N. A. (1975): “Wagner’s Law of public expenditure: What is the appropriate measurement for a valid test?” Public Finance 30, 77–84.  Google Scholar
  46. Musgrave, R. A. (1970 and 1973): Fiscal systems. Yale University Press, New Haven and London.  Google Scholar
  47. Narayan, P. K./Nielsen, I./Smyth, R. (2008): “Panel data, cointegration, causality and Wagner’s Law: empirical evidence from Chinese provinces,” China Economic Review 19, 297–307.  Google Scholar
  48. Oxley, L (1994): “Cointegration, causality and Wagner’s Law: A test for Britain 1870–1913,” Scottish Journal of Political Economy 41 (3), 286–298.  Google Scholar
  49. Peacock, A./Scott, A. (2000): “The curious attraction of Wagner’s Law,” Public Choice 102 (12), 1–17.  Google Scholar
  50. Peacock, A./Wiseman, J. (1961 and 1967): The growth of public expenditure in the United Kingdom. George Allen and Unwin. London.  Google Scholar
  51. Petry, F./Imbeau, L./Crête, J./Clavet, M. (2000): “Explaining the evolution of government size in the Canadian provinces,” Public Finance Review 28 (1), 26–47.  Google Scholar
  52. Priesmeier, C./Koester, G. (2012): “Does Wagner’s law ruin the sustainability of German public finances”. Discussion Paper Deutsche Bank 8/2012.  Google Scholar
  53. Pryor, F. L. (1968): Public Expenditures in Communist and Capitalist Nations. Richard D. Irwin, Homewood, Ill.  Google Scholar
  54. Ram, R. (1987): “Wagner’s hypothesis in time-series and cross-section perspectives: evidence from ‘real’ data for 115 countries,” Review of Economics and Statistics 62 (2), 194–204.  Google Scholar
  55. Richter, C./Paparas, D. (2013): “The validity of Wagner’s Law in Greece during the last two centuries,” Applied Economics Quarterly 59(4), 331–336.  Google Scholar
  56. Thorn, R. (1967): “The evolution of public finances during economic development,” The Manchester School of Economic and Social Studies 35, 19–35.  Google Scholar
  57. Tim, H. (1961): “Das Gesetz der wachsenden Staatsausgaben,” Finanzarchiv 2, 201–247.  Google Scholar
  58. Wagner, A. (1890): Finanzwissenchaft (third edition, Leipzig). In: Classics in the Theory of Public Finance (eds. R. Musgrave and A. Peacock) (1958). London. Macmillan.  Google Scholar
  59. Wahab, M. (2004): “Economic growth and government expenditure: evidence from a new test specification,” Applied Economics 36, 2125–2135.  Google Scholar
  60. Williamson, J. G. (1961): “Public expenditure and revenue: An international comparison,” Manchester School of Economic and Social Studies 28, 43–56.  Google Scholar


Wagner’s Law has been widely tested using empirical analysis, yet very few studies have conducted this analysis using disaggregated data over an extended period of time. This study examines the economic classification of public spending (COFOG) in Spain for the period 1958 – 2015. Our findings confirm previous results in the sense that the law is not rejected for public spending as a whole. Furthermore, our results reveal that social aid and current transfers can be considered as luxury goods as their demand grows more than proportionally when income rises. Our findings also confirm the results of other studies in which education, healthcare and social aid all fail to reject Wagner’s Law. The study provides two important contributions to the literature. First, the study considers a substantially long time period to examine the relationship between different categories of public spending and economic growth. This type of analysis has been carried out on occasion for other economies but never for the Spanish case. Second, our study uses the methodology of unit roots and cointegration with structural breaks, representing an innovation in this field.

Table of Contents

Section Title Page Action Price
Manuel Jaén-Garcia: A Review of Wagner’s Law with Disaggregated Data for Spain 1
Abstract 1
1. Introduction 1
2. Review of the Empirical Literature 3
3. Empirical Test 4
4. Cointegration Equations and Correction Error Model 1
5. Robustness analysis 1
6. Summary and Conclusions 2
Compliance With Ethical Standards 2
References 2