المستخلص: |
The Present paper investigates the validity of Wagner’s law: the tendency of government expenditure to grow as national in¬come increases. In other words, this paper aims to test the cau¬sality relationship between real government expenditure and real GDP for the state of Qatat for the period 1980-2006. In doing so, the Granger-causality approach is used, and stationary and cointergation tests are performed to ensure the validity of the standard OLS regression estimates. The test results suggest the real GDP and Government expenditure are not stationary in their levels, but stationary in their first difference. The Johansen coin¬tegration test does not support the existence of long run relation¬ship between the variables, as a results the short run analysis is performed using the Granger-causality approach. The empirical results show that Granger-causality is a unidi¬rectional relationship which runs from government expenditure to GDP. This implies that the Keynesian proposition is applicable to Qatar economy. Therefore Wagner’s law is not valid for -Qatar economy.
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