The  validity if Wagner law has been tested for G7
Industrial countries  in this pepper
using time- series data and econometrics modern techniques for the period of

The pepper considered several specification
which commonly employed in the literature, for empirical investigating of
Wagner law in last dictates. In the empirical section of this pepper the ADF
and ERS-Piont Optimal unit root has been tested to examine the level of
stationarity for variables which indicate all variables are stationary in their
first differences.

The lag lengths have been selected
on the basis of AIC value which revealed in the (annx…….) for the further process
of  johansen maximum likelihood co
integration test,  The finding of Johansen
co-integration test for  G7 industrial counties
shows that except Italy , there is a long run co-integration exist between
Government consumption and Gross domestic product in the period of 1970-2016
for Canada, Germany, France, United kingdom, United states and Japan which the normalization
of coefficients also supports the finding but by running VECM (Vector Error Correction
Model), the finding of Error correction coefficient(table:….) and Wald Test does
not support the long run and short run causality for Japans variables ,whereas  it supports the long run and short run
causality for other countries.

The Granger’s causality test revealed
a bi-directional causality for variables of Canada, Germany and France and uni-directional
causality for  variables of United
Kingdom and United State and no causality for variables of Italy, but in case of Japan as the finding shows;
a positive  long run relationship has
been founded between government consumptions and gross domestic products  which supported the law but the causality
tests doesn’t support it.

Finally the
finding of the pepper support the validity of Wagner low for

Finally the
pepper found a strong support of Wagner law for Canada, Germany, France, United
Kingdom and United States, the finding also shows that the Wagner law does not
hold for Italy and Japan in the period of 1970-2016.


I'm Katy!

Would you like to get a custom essay? How about receiving a customized one?

Check it out