The Study of the Causality Between the Economic Growth and Government Expenditure in Algeria, Through Testing the Wagner’s Law During the Period 1967-2017
Keywords:
Economic Growth, Government Expenditure, Wagner's law, Algeria.Abstract
This paper attempts to analyze the relationship between economic growth and government expenditure in Algeria during the period 1967-2017 through studying the causality between these two variables. Using the Co-integration Regression and Error Correction Model, the study found that both series are stable at the first difference and are complementary at the same degree I(1), and there is a synchronous integration relationship between economic growth and government expenditure in Algeria. According to the Granger test, the study also found that there is a causality in a one-way direction, from economic growth to government expenditure, and the equilibrium relationship is in the long run, which is in accordance with Wagner's law.
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