An Empirical Analyses of The Relationship Between Economic Growth and Public Expenditures in Turkey: 1950 - 2009

The relationship between public expenditure and national income, which was first mentioned by Wagner in 1883, has long been debated in economic literature both on theoretical and empirical ground. The purpose of this study is to analyze the validity of Wagner’s law in Turkey by using dataset over 1950-2009 period. The Law states that there is a long-run tendency for public expenditure to grow relative to national income. In case of validity of the Law, causality must run from national income to public expenditure. Empirical results obtained from the cointegration and vector error correction tests indicate that all five versions of the Law that we use in this study support the Law.