Testing for structural changes in the Wagner's Law for a sample of East Asian countries

摘要

This paper examines the Wagner's Law for a sample of East Asian countries (China, Hong Kong, Japan and South Korea) by utilizing the structural break methods viz., Gregory and Hansen (J Econom 70:99-126,1996a; Oxf Bull Econ Stat 58:555-559,1996b), Carrion-i-Silvestre and Sanso (Oxf Bull Econ Stat 68:623-646,2006) and Bai and Perron (Econometrica 66:47-78,1998; J Appl Econom 18:1-22,2003). We find that there exists weak cointegrating relationship between the log of nominal public expenditure as a share of nominal GDP to the log of real per capita GDP. However, we find support for the Wagner's Law when the relationship is extended to include a measure of the population structure-the dependency ratio. Our findings support the explanations suggested by Durevall and Henrekson (J Public Econ 95(7-8):708-722,2011).