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Volume : II, Issue : VII, August - 2012 GOVERNMENT EXPENDITURE AND ECONOMIC GROWTH: TESTING OF WAGNER'S HYPOTHESIS SHARAD N. BANSAL and SHRADHA H. BUDHEDEO Published By : Laxmi Book Publication Abstract : The paper examines the relationship between public expenditure and economic
growth in the Indian states by empirically testing the Wagner's Law. The study uses
alternative interpretations of the Wagner's Hypothesis to test the hypothesis of
increasing state activity for twenty nine Indian states using cross-sectional data and
regression analysis. The empirical evidence reported in the paper does not support
Wagner's hypothesis of increasing state activities. The Wagner's hypothesis is rejected
meaning thereby that government expenditure is increasing at a slower rate than the
economic growth. Hence, there is decreasing role of government in Indian states Keywords : Article : Cite This Article : SHARAD N. BANSAL and SHRADHA H. BUDHEDEO, (2012). GOVERNMENT EXPENDITURE AND ECONOMIC GROWTH: TESTING OF WAGNER'S HYPOTHESIS. Indian Streams Research Journal, Vol. II, Issue. VII, http://oldisrj.lbp.world/UploadedData/1254.pdf References : - Abizadeh, S. and Gray, J. [1985], Wagner's Law: A Pooled Time Series Cross-Section Comparison, National Tax Journal, 38, 209-238.
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