Acta Univ. Agric. Silvic. Mendelianae Brun. 2018, 66, 1227-1237

https://doi.org/10.11118/actaun201866051227
Published online 2018-10-29

Testing Wagner’s Law and Keynesian Hypothesis in Selected Post‑Soviet Countries

Jeyhun A. Abbasov1,2,3, Khatai Aliyev4,5,6

1Central Bank of Azerbaijan Republic, AZ1014, Rashid Behbudov str. 90, Baku, Azerbaijan
2Azerbaijan State University of Economics, International Graduate and Doctorate Center, AZ1001, Istiqlaliyyat str. 6, Baku, Azerbaijan
3Baku Engineering University, Department of Mathematics and Informatics, AZ0101, Hasan Aliyev str. 120, Khirdalan city, Azerbaijan
4Azerbaijan State University of Economics, UNEC Empirical Research Center, AZ1001, Istiqlaliyyat str. 6, Baku, Azerbaijan
5Baku Engineering University, Department of World Economy, AZ0101, Hasan Aliyev str. 120, Khirdalan city, Azerbaijan
6ASERC LLC, AZ1110, Mirali Gashgai str. 97/37, Baku, Azerbaijan

The aim of this research is to test Wagner’s law and Keynesian hypothesis in 9 Post‑Soviet countries – Estonia, Latvia, Lithuania, Uzbekistan, Azerbaijan, Georgia, Kyrgyz Republic, Moldova, and Ukraine. For this purpose, long‑ and short‑run causality between real per capita GDP and real per capita government expenditures are estimated by employing ARDL modelling approach. Estimation results support validity of Wagner’s law for Latvia, Lithuania, Uzbekistan, Georgia, Kyrgyz Republic and Ukraine, and validity of Keynesian hypothesis for Estonia, Uzbekistan, Azerbaijan, Kyrgyz Republic, and Moldova in the long‑run. Meanwhile, research findings indicate strong bidirectional short‑run causality in all countries except Lithuania and Kyrgyz Republic in the short‑run.

References

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