by Yay, Turan
and Tastan, Huseyin
Published in Romanian Journal of Economic Forecasting, 2009, volume 12 issue 4, 101-118
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The share of government expenditures in GDP has displayed steady increase in both developed and developing countries during the 20th century. This observation has led economists to explore the reasons and the underlying mechanism both theoretically and empirically. Several hypotheses on the relationship of public expenditures with income growth, budget deficits and government revenues have been reexamined in the light of recent developments in econometric methods. This study presents results from testing three hypotheses, namely, the Wagner Hypothesis, the Buchanan- Wagner Hypothesis and the Tax-Expenditure Hypothesis, using data from Turkey for the period 1950-2004. In the empirical section we employed time series econometric techniques to analyze long run economic relationships. Several unit root and cointegration tests are utilized to see the robustness of results across different methods.
Public expenditures, Wagner Hypothesis, Buchanan-Wagner Hypothesis,
Tax-Expenditure Hypothesis, Turkey