Wagner's law and Italian disaggregated public spending: some empirical evidences

Wagner’s Law is the first model of public spending in the history of public finance. The aim of this article is to assess its empirical evidence in Italy for the period 1960-2008 at a disaggregated level, using a time-series approach. After a brief introduction, a survey of the economic literature on this issue is shown, before estimating the specifications of Wagner’s Law for some specific items of public spending (for interests, for final consumption, for labour dependent income, for grants on production, and for public investments). We found a cointegration relationship for three out of five items. Moreover, Granger causality tests results show evidence in favour of Wagner’s law only for spending for passive interests in the long-run, and for spending for dependent labour income in the short-run. Some notes on the policy implications of our empirical results conclude the paper