Validity of Wagnerâs law and the Keynesian View for the Iranian Economy A Time Series Analysis

Khodaparast Mashhadi, Mahdi; Falahi, Mohammad Ali; Falahi, Mohammad Ali; Salimifar, Mostafa; Haghnejad, Amin

Validity of Wagnerâs law and the Keynesian View for the Iranian Economy A Time Series Analysis

Authors

Mahdi Khodaparast Mashhadi ¹

Mohammad Ali Falahi ²

Mostafa Salimifar ³

Amin Haghnejad ⁴

¹ Assistant Professor of Economics at Ferdowsi University of Mashhad

² Associate Professor of Economics at Ferdowsi University of Mashhad

³ Associate Professor of economics at Ferdowsi University of Mashhad

⁴ M.A. in Economics at Ferdowsi University of Mashhad

Abstract

The objective of this paper is to investigate the validity of Wagner’s law and the Keynesian view with regards to the relationship between the non-oil gross domestic product and the public sector size for the Iranian economy during the period of 1967-2007. Time series analysis techniques have been used which include unit root tests, cointegration tests and Hsiao causality test. The findings indicate that Wagner’s Law is confirmed in both the short-run and the long-run; whereas the Keynesian view is approved only in the short-run for Iran.

Keywords

C32

H50 E12

Wagner’s Law

Keynesian view

Public Sector

Hsiao’s causality

Iran. JEL Classification: C32

E12

H10

H50