Akademik Veri Yönetim Sistemi
İktisat Politikasi Araştırmaları Dergisi, cilt.8, sa.2, ss.199-210, 2021 (Hakemli Dergi)
One of the main issues which has been given great emphasis ineconomics literature, particularly since the 19th century, is that ofthe relationship between public expenditure and economic growth.There are two theoretical approaches in the literature dealing with thisrelationship. The first is Wagner’s law which states that public expenditureincreases as growth expands. The second is related to the Keynesianhypothesis which states that public spending encourages growth. Inother words, while Wagner asserts that the causality runs from growth topublic spending, Keynes claims that public spending causes growth. Inthis study, the validity of Wagner’s Law was analyzed with the Dumitrescuand Hurlin (2012) panel causality test using annual data from betweenthe years 1995 and 2019 for eleven European Union member transitioneconomies. Our main purpose in this study was to determine whetherpublic expenditure can be used as an effective policy tool in transitioneconomies that are members of the European Union. The test resultsrevealed that there is one-way causality from growth to public spending.In other words, Wagner’s Law is valid for the country group and periodsubject to the study.