Abstract

RODRIGUEZ BENAVIDES, Domingo; VENEGAS-MARTINEZ, Francisco  and  LIMA SANTIAGO, Vicente. Wagner's Law versus the Keynesian Theory: The case of Mexico, 1950-2009. Inv. Econ [online]. 2013, vol.72, n.283, pp.69-98. ISSN 0185-1667.

This article examines Wagner's law and Keynesian theory for the case of Mexico from 1950 to 2009. Wagner's law stipulates that growth in public expenditures is explained as the result of economic activity, while the Keynesian hypothesis in this area puts forward the opposite view. To analyze these two positions, the authors use three different specifications proposed by: 1) Peacock and Wiseman (1961), 2) Musgrave (1969), and 3) Gupta (1967) and Michas (1975). The results reveal that the first two specifications show evidence in favor of Wagner's law, which tends to be reinforced by the direction of the causality tests done to estimated vector autoregression models.

Keywords : Wagner's law; Keynesian theory; fiscal policy.

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