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An Empirical Investigation of Wagner's Hypothesis by Using a Model Occurrence Framework
Author(s) -
Koop Gary,
Poirier Dale J.
Publication year - 1995
Publication title -
journal of the royal statistical society: series a (statistics in society)
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.103
H-Index - 84
eISSN - 1467-985X
pISSN - 0964-1998
DOI - 10.2307/2983407
Subject(s) - econometrics , psychology , mathematical economics , computer science , mathematics
SUMMARY Wagner's hypothesis asserts that as a country's level of development increases so does the relative size of its public sector. This study examines the empirical validity of Wagner's hypothesis. Based on data from 86 countries, the study employs a model occurrence framework to determine whether Wagner's hypothesis holds for the countries in which it is expected to. The results are discouraging for believers in Wagner's hypothesis. Indeed, Wagner's hypothesis is supported in only a third of the countries and its variable occurrence is not explained well in terms of a priori applicability conditions either in sample or out of sample.