Is Wagner’s law applicable for fast growing economies? BRICS and MATIK countries

Abstract

This study investigates the effects of public spending, which is placed among the public sector’s economic activities, on the economic growth. The relationship in which the increase of public sector spending moves together with the growth is called as Wagner’s Law and it is examined through developing countries’ data. The hypothesis which is being tested is “there is a positive relationship between public spending and economic growth”.  The study focuses on 10 different fast growing countries’ economies’ data which are as firstly so called “BRICS Countries” which is composed of the fastest developing countries as Brazil, Russia, India, China and South Africa and secondly “MATIK Countries” which is contained of other fast developing countries as Mexico, Argentina, Turkey, Indonesia and Korea. Hypothesis is tested by using time series for the analyses. The primary contribution which the study would like to make is to bring attention to “MATIK economies”. This is a leading study in which Wagner’s Law is tested in addition to the fact that these country groups are moved to the agenda together. According to the applied test results, the findings that illustrate Wagner’s Rule is not valid for almost all the countries (BRICS+MATIK; BM) are reached.