Public sector participation in the development of the EU economies

This paper tests statistically the long run and causal relationship between government spending and income, applying six alternative functional forms, by employing two of the most advanced econometric methods, the two-step Engle and Granger cointegration method and the Granger causality test, using data for the EU-15 countries over the time period 1949-1998. There is limited support in favour of Wagner’s law in most European countries.peer-reviewe