Evidence of Wagner's law from Indian states

Seema Narayan, Badri Narayan Rath, Paresh Kumar Narayan

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Abstract

In this paper, we test for Wagner's law for 15 Indian states. We consider nine panels of states based on geography and level of economic development. Using panel unit-root, panel-cointegration, and panel-Granger causality analysis, we unravel strong evidence of Wagner's law. However, we find that the Wagner's law relationship is consumption rather than capital expenditure driven. This is a fresh revelation and our results are robust to different model specifications.

Original languageEnglish
Pages (from-to)1548-1557
Number of pages10
JournalEconomic Modelling
Volume29
Issue number5
DOIs
Publication statusPublished - Sept 2012
Externally publishedYes

Keywords

  • Cointegration
  • Heterogeneous
  • Indian states
  • Panel data
  • Unit root
  • Wagner's Law

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