Business Administration and Business Economics
Abstract
This study tests Wagner’s law in Nigeria in both the short and long-run using the
autoregressive distributed lag (ARDL) technique of estimation and controlling for structural breaks
between the periods 1981-2016. Results showed that both in the short and long-run, evidence pointed
to a negative but insignificant relationship between government expenditure and economic growth, with
a larger negative effect in the long-run. The study controlled for oil export earnings, which was found
to positively and significantly influence government spending in both the short and long-run. Results
did not support the Wagner law. It was therefore recommended that the economy be diversified into
more labour intensive sectors so as to increase output and income per capita and so that government
expenditure can be based more on tax receipts than on oil export earnings as more financially
responsible households will demand increase in government expenditure as their level of income
increases, especially for the provision of public sector services the households currently bear.
References
Abbasov, J.A. & Aliyev, K. (2018). Testing Wagner’s Law and Keynesian Hypothesis in Selected Post-
Soviet Countries. Acta Universitatis Agricuturae et Silviculturae Mendelianae Brunensis, 66(5), pp.
1227-1237.
Abdulrasheed, B. (2017). Causality between Government Expenditure and Government Revenue in
Nigeria. Asian Journal of Economics and Empirical Research, 4(2), pp. 91-98.
Abu, N. & Abdullahi U. (2010). Government Expenditure and Economic Growth in Nigeria, 1970-
2008: A Disaggregated Analysis. Business and Economics Journal, 4, pp. 1-11.
Adil, M.H.; Ganaie, A.A. & Kamaiah, B. (2017). Wagner’s Hypothesis: An Empirical Verification.
IIM Kozhikode Society & Management, Review, 6 (1), pp. 1–12.
Akinlo, A.E. (2013). Government Spending and National Income Nexus for Nigeria. Global Journal
of Business Research, 7(1), pp. 33-42.
Akitoby, B.; Clements, B.; Gupta, S. & Inchauste G. (2006). Public Spending, Voracity and Wagner’s
Law in Developing Countries. European Journal of Political Economy, 22, pp. 908-924.
Aladejare, S.A. (2013). Government Spending and Economic Growth: Evidence from Nigeria, Munich
Personal RePEc Archive, online at https://mpra.ub..uni-muenchen.de/43916/ MPRA Paper No. 43916.
Ansari, M.I.; Gordon, D.V. & Akuamoah, C. (1997). Keynes Versus Wagner: Public Expenditure and
National Income for Three African countries, Applied Economics, 29(4), pp. 543-550, DOI:
10.1080/000368497327038.
Antonis, A.; Constantinos, K. & Persefoni, T. (2013). Wagner’s Law versus Keynesian Hypothesis:
Evidence from pre-WWII Greece. Panoeconomicus, 4, pp. 457-472.
Apere, T.O. (2017). Impact of Crude Oil on Nigeria’s Fiscal Policy Formulation. European Journal of
Research in Social Sciences, 5(3), pp. 74-83.
Aregbeyen, O. (2006). Co-integration, Causality and Wagner’s Law: A Test for Nigeria, 1970-2003.
Central Bank of Nigeria Economic and Financial Review, 44(2), pp. 1-17.
Aruwa, A.S. (2012). Public Finances and Economic Growth in Nigeria. Public and Municipal Finance,
1(2).
Awomuse, B.O.; Olorunleke, K. & Alimi, R.S. (2013). The Effect of Federal Government Size on
Economic Growth in Nigeria, Munich Personal RePEc Archive, online at https://mpra.ub..unimuenchen.
de/53467/ MPRA Paper No. 53467.
Bayrakdar, S.; Demez, S. & Yapar, M. (2015). Testing the Validity of Wagner’s Law: 1998-2004. The
case of Turkey. Procedia Social and Behavioural Sciences, 195, pp. 493-500.
Chang, T.; Liu, W. & Caudill, S.B. (2004). A Re-examination of Wagner’s Law for Ten Countries
Based on Co-integration and Error-correction Modelling Techniques. Applied Financial Economics,
14(8), pp. 577-589.
Chletsos, M. & Kollias, C. (1997). Testing Wagner’s Law using Disaggregated Public Expenditure
Data in the case of Greece: 1958-93. Applied Economics, 29(3), pp. 371-377.
Chow, Y.; Cotsomitis, J.A. & Kwan, A.C.C. (2002). Multivariate Co-integration and Causality Tests
of Wagner Hypothesis: Evidence form the UK. Applied Economics, 34 (13), pp. 1671-1677.
Danmola, R.A.; Olateju, A.O. & Abba, M.W. (2013). Nexus between Public Expenditure and Economic
Growth by testing the Wagner’s Law Time Series: Evidence from Nigeria. International Journal of
Development and Sustainability, 2(4), pp. 2383-2395.
Egunjobi, T.A. (2013). Re-engineering Public Expenditure Patterns for Economic Development in
Nigeria. Management Science and Engineering, 7(2), pp. 28-40.
Halicioglu, F. (2003). Testing Wagner’s Law for Turkey: 1960-2000. Review of Middle East Economics
and Finance, 1(2), pp. 129-140.
Ighodaro, A.U. & Oriakhi, D.E. (2010). Does the Relationship between Government Expenditure and
Economic Growth follow Wagner’s Law in Nigeria? Annals of the University of Petrosani, Economics,
10(2), pp. 185-198.
Islam, A.M. (2001). Wagner’s Law Revisited: Co-integration and Exogeneity Tests for the USA.
Applied Economics Letters, 8(8), pp. 509-515.
Kholluri, B.R.; Panik, M.J. & Wahab, M.S. (2010). Government Expenditure and Economic Growth:
Evidence from G7 Countries. Applied Economics, 32(8), pp. 1059-1068.
Kumar, S.; Webber, D.J. & Fargher, S. (2017). Wagner’s Law Revisited: Co-integration and Causality
tests for New Zealand. Applied Economics, 44(5), pp. 1-11.
Loizides, J. & Vamvoukaz, G. (2005). Government Expenditure and Economic Growth: Evidence from
Trivariate Causality Testing, Journal of Applied Economics, VIII(1), pp. 125-152.
Mohammed, H.; Cak, M. & Cak, D. (2008). Wagner’s Hypothesis. Journal of Economic Studies, 35(1),
pp. 94-106.
Muritala, T. & Taiwo, A. (2011). Government Expenditure and Economic Development: Empirical
Evidence from Nigeria, Munich Personal RePEc Archive, online at https://mpra.ub..unimuenchen.
de/37293/MPRA Paper No. 37293.
Nasiru, I. (2012). Government Expenditure and Economic Growth in Nigeria: Co-integration Analysis
and Causality Testing, Academic Research International, 2(3), pp. 718-723.
Nworji, I.A.; Okwu, A.T.; Obiwuru, T.C. & Nworji, L.O. (2012). Effects of Public Expenditure on
Economic Growth in Nigeria: A Disaggregated Time Series Analysis, International of Journal of
Management Sciences and Business Research, 1(7), pp. 1-15.
Ogbonna, B.C. (2012). Does the Wagner’s Law hold for Nigeria? 1950-2008. JORIND, 10(2), pp. 290-
299.
Okoro, A.S. (2013). Government Spending and Economic Growth in Nigeria (1980-2011). Global
Journal of Management and Business Research, 13(5).
Onuorah, A.C. & Akujuobi, L.E. (2012). Empirical Analysis of Public Expenditure and Economic
Growth in Nigeria, Arabian Journal of Business and Management Review, 1(11), pp. 46-59.
Pesaran, H.; Smith, R. & Shin, Y. (2001). Bounds Testing approaches to the Analysis of Long-run
Relationship. Journal of Applied Econometrics 16, pp. 289-326.
Raza, N.; Shazad, S.J.H.; Tiwari, A.K. & Shahbaz, M. (2016). Asymmetric Impact of Gold, Oil Prices
and Their Volatilities on Stock Prices of Emerging Markest, Resources Policy, Retrieved from
http://dx.doi.org/10.1016/j.resourpol.2016.06.0110301-4207 on 1st may, 2018.
Wagner, A. (1883). Three Extracts on public finance. In R.A. Musgrave & A.T. Peacock. (eds) (1958).
Classics in the Theory of Public Finance. London: Macmillan.
Soviet Countries. Acta Universitatis Agricuturae et Silviculturae Mendelianae Brunensis, 66(5), pp.
1227-1237.
Abdulrasheed, B. (2017). Causality between Government Expenditure and Government Revenue in
Nigeria. Asian Journal of Economics and Empirical Research, 4(2), pp. 91-98.
Abu, N. & Abdullahi U. (2010). Government Expenditure and Economic Growth in Nigeria, 1970-
2008: A Disaggregated Analysis. Business and Economics Journal, 4, pp. 1-11.
Adil, M.H.; Ganaie, A.A. & Kamaiah, B. (2017). Wagner’s Hypothesis: An Empirical Verification.
IIM Kozhikode Society & Management, Review, 6 (1), pp. 1–12.
Akinlo, A.E. (2013). Government Spending and National Income Nexus for Nigeria. Global Journal
of Business Research, 7(1), pp. 33-42.
Akitoby, B.; Clements, B.; Gupta, S. & Inchauste G. (2006). Public Spending, Voracity and Wagner’s
Law in Developing Countries. European Journal of Political Economy, 22, pp. 908-924.
Aladejare, S.A. (2013). Government Spending and Economic Growth: Evidence from Nigeria, Munich
Personal RePEc Archive, online at https://mpra.ub..uni-muenchen.de/43916/ MPRA Paper No. 43916.
Ansari, M.I.; Gordon, D.V. & Akuamoah, C. (1997). Keynes Versus Wagner: Public Expenditure and
National Income for Three African countries, Applied Economics, 29(4), pp. 543-550, DOI:
10.1080/000368497327038.
Antonis, A.; Constantinos, K. & Persefoni, T. (2013). Wagner’s Law versus Keynesian Hypothesis:
Evidence from pre-WWII Greece. Panoeconomicus, 4, pp. 457-472.
Apere, T.O. (2017). Impact of Crude Oil on Nigeria’s Fiscal Policy Formulation. European Journal of
Research in Social Sciences, 5(3), pp. 74-83.
Aregbeyen, O. (2006). Co-integration, Causality and Wagner’s Law: A Test for Nigeria, 1970-2003.
Central Bank of Nigeria Economic and Financial Review, 44(2), pp. 1-17.
Aruwa, A.S. (2012). Public Finances and Economic Growth in Nigeria. Public and Municipal Finance,
1(2).
Awomuse, B.O.; Olorunleke, K. & Alimi, R.S. (2013). The Effect of Federal Government Size on
Economic Growth in Nigeria, Munich Personal RePEc Archive, online at https://mpra.ub..unimuenchen.
de/53467/ MPRA Paper No. 53467.
Bayrakdar, S.; Demez, S. & Yapar, M. (2015). Testing the Validity of Wagner’s Law: 1998-2004. The
case of Turkey. Procedia Social and Behavioural Sciences, 195, pp. 493-500.
Chang, T.; Liu, W. & Caudill, S.B. (2004). A Re-examination of Wagner’s Law for Ten Countries
Based on Co-integration and Error-correction Modelling Techniques. Applied Financial Economics,
14(8), pp. 577-589.
Chletsos, M. & Kollias, C. (1997). Testing Wagner’s Law using Disaggregated Public Expenditure
Data in the case of Greece: 1958-93. Applied Economics, 29(3), pp. 371-377.
Chow, Y.; Cotsomitis, J.A. & Kwan, A.C.C. (2002). Multivariate Co-integration and Causality Tests
of Wagner Hypothesis: Evidence form the UK. Applied Economics, 34 (13), pp. 1671-1677.
Danmola, R.A.; Olateju, A.O. & Abba, M.W. (2013). Nexus between Public Expenditure and Economic
Growth by testing the Wagner’s Law Time Series: Evidence from Nigeria. International Journal of
Development and Sustainability, 2(4), pp. 2383-2395.
Egunjobi, T.A. (2013). Re-engineering Public Expenditure Patterns for Economic Development in
Nigeria. Management Science and Engineering, 7(2), pp. 28-40.
Halicioglu, F. (2003). Testing Wagner’s Law for Turkey: 1960-2000. Review of Middle East Economics
and Finance, 1(2), pp. 129-140.
Ighodaro, A.U. & Oriakhi, D.E. (2010). Does the Relationship between Government Expenditure and
Economic Growth follow Wagner’s Law in Nigeria? Annals of the University of Petrosani, Economics,
10(2), pp. 185-198.
Islam, A.M. (2001). Wagner’s Law Revisited: Co-integration and Exogeneity Tests for the USA.
Applied Economics Letters, 8(8), pp. 509-515.
Kholluri, B.R.; Panik, M.J. & Wahab, M.S. (2010). Government Expenditure and Economic Growth:
Evidence from G7 Countries. Applied Economics, 32(8), pp. 1059-1068.
Kumar, S.; Webber, D.J. & Fargher, S. (2017). Wagner’s Law Revisited: Co-integration and Causality
tests for New Zealand. Applied Economics, 44(5), pp. 1-11.
Loizides, J. & Vamvoukaz, G. (2005). Government Expenditure and Economic Growth: Evidence from
Trivariate Causality Testing, Journal of Applied Economics, VIII(1), pp. 125-152.
Mohammed, H.; Cak, M. & Cak, D. (2008). Wagner’s Hypothesis. Journal of Economic Studies, 35(1),
pp. 94-106.
Muritala, T. & Taiwo, A. (2011). Government Expenditure and Economic Development: Empirical
Evidence from Nigeria, Munich Personal RePEc Archive, online at https://mpra.ub..unimuenchen.
de/37293/MPRA Paper No. 37293.
Nasiru, I. (2012). Government Expenditure and Economic Growth in Nigeria: Co-integration Analysis
and Causality Testing, Academic Research International, 2(3), pp. 718-723.
Nworji, I.A.; Okwu, A.T.; Obiwuru, T.C. & Nworji, L.O. (2012). Effects of Public Expenditure on
Economic Growth in Nigeria: A Disaggregated Time Series Analysis, International of Journal of
Management Sciences and Business Research, 1(7), pp. 1-15.
Ogbonna, B.C. (2012). Does the Wagner’s Law hold for Nigeria? 1950-2008. JORIND, 10(2), pp. 290-
299.
Okoro, A.S. (2013). Government Spending and Economic Growth in Nigeria (1980-2011). Global
Journal of Management and Business Research, 13(5).
Onuorah, A.C. & Akujuobi, L.E. (2012). Empirical Analysis of Public Expenditure and Economic
Growth in Nigeria, Arabian Journal of Business and Management Review, 1(11), pp. 46-59.
Pesaran, H.; Smith, R. & Shin, Y. (2001). Bounds Testing approaches to the Analysis of Long-run
Relationship. Journal of Applied Econometrics 16, pp. 289-326.
Raza, N.; Shazad, S.J.H.; Tiwari, A.K. & Shahbaz, M. (2016). Asymmetric Impact of Gold, Oil Prices
and Their Volatilities on Stock Prices of Emerging Markest, Resources Policy, Retrieved from
http://dx.doi.org/10.1016/j.resourpol.2016.06.0110301-4207 on 1st may, 2018.
Wagner, A. (1883). Three Extracts on public finance. In R.A. Musgrave & A.T. Peacock. (eds) (1958).
Classics in the Theory of Public Finance. London: Macmillan.
Published
2021-06-25
How to Cite
Collective Authors. (2021). Business Administration and Business Economics: Array. Acta Universitatis Danubius. Œconomica, 14(7). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/1189
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