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Research Journal of Humanities and Social Sciences
Year : 2019, Volume : 10, Issue : 4
First page : ( 1011) Last page : ( 1024)
Print ISSN : 0975-6795. Online ISSN : 2321-5828.
Article DOI : 10.5958/2321-5828.2019.00166.9

Wagner's Law and Public Expenditure in Rajasthan: An Econometric Analysis

Kaur Kirandeep*

Statistical Officer, Department of Planning, Government of Rajasthan

*Corresponding Author Email: sandhu.kirandeep27@gmail.com

JEL Classification-H52; C22; O23; E62.

Online published on 3 February, 2020.

Abstract

The present study endeavors to analyze the validity of Wagner law in Rajasthan Economy for period of 1970–71 to 2013–14. The six versions of Wagner law has been analyzed to investigate the relationship between State Government Expenditure and Net State Domestic Product. According to the Wagner law the economic growth is the determinant of the public expenditure. The study applied the unit root test and cointegration test to find the long run relationship between government expenditure and Net State Domestic Product and Standard Granger Causality test to determine causality between the variables. The study found the mix results of various versions of the Wager law for Rajasthan Economy. The results of the study indicates that out of six version only three version (Peacock, Pryor and Guffman Version) are valid for the Rajasthan Economy where the unidirectional causality exists between Net State Domestic Product and State Government Expenditure in long run whereas the short run causality results states bi-directional causality in Peacock and Guffman Version and no causal relationship between the variables in Pryor and Gupta Version. The results of the Standard Pair-wise Granger Causality reflected that there is no causality between the variables in Musgrave and Mann Version. The study concluded that Peacock and Guffman Version of Wagner Law are valid for the Rajasthan Economy.

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Keywords

Wagner's Law, Public Expenditure, Unit root, Cointegration, Causality analysis.

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