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The objective of this study is to analyze a reduced model of the determinants of public spending growth from a demand side perspective. The model is based on the Buchanan and Wagner hypothesis but incorporates several other variables considered as determinants of public spending growth as well. The formulation of two different equations confirmed the influence of deficit on public spending growth during the period 1958-2014. This work provides two contributions to the analysis of public spending determinants in Spain. Firstly, the study period is considerably longer than that of others, and, secondly, unit root and cointegration analysis are used with breakpoints, which, to our knowledge, have not been previously utilized.

Public expenditure and deficit in Spain (1958-2014)