Abstract: The objective of this paper is to investigate the nature and direction of causal relationship between government expenditure and economic growth in India in contexts of and Wagner's and Keynesian laws. The time series data used in the present study covers the period from 1975-76 to 2014-15. It is found that there is no equilibrium long term relationship between economic growth and government expenditure. Uni-directional causality is observed from government expenditure to economic growth and no feed-back mechanism. It nullifies the applicability of Wagner’s law in India and validates the Keynesian law. Thus, it is recommended to give insights into the trends of transformation process, association between the two. The policymakers are suggested to incur huge government expenditure to accelerate the growth of Indian economy and adopt active Keynesian policies.
Keywords: economic growth, government expenditure, causality, Keynesian law, Wagner’s law, India.
Title: Co-Integration And Causality Analysis: An Empirical Inquiry into the Validity of Wagner’s And Keynesian Laws in India
Author: Dr. Paranan Konwar
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
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