المستخلص: |
In this paper, we have tested the applicableness of Wagner's Law in the case of Saudi Arabia. We have used annual data series of capital expenditures and revenue expenditures of government. Also, we have used Oil-GDP and Non-oil GDP in the analysis to test the impact of income growth on government spendings. Further, we have used DF-GLS unit root test for stationarity analysis and ARDL cointegration technique for long and short run analysis. Our results shows a strong long and short run relationships for both capital expenditures and revenue expenditures models. Further, we have found a positive and significant impact of non-oil GDP on both kinds of government spending in long run and a positive and significant impact of oil-GDP on both kinds of government spending in short run. These are evidence for holding Wagner’s law in Saudi Arabia. Based on our results, we are proposing the government to rationalize its spending in long and short run to support a sound economic growth.
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