Testing Wagner’s Law for Germany: An Exercise in Applied Time Series Analysis / Gilt das Wagner’sehe Gesetz für Deutschland? Eine Übung in angewandter Zeitreihenanalyse

Summary This paper tests for Wagner’s Law in Germany over the period 1960 to 1993, using quarterly data. The hypothesis is specified as the elasticity of the share of the state sector in GNP with respect to real GNP per capita. After testing for integration and cointegration, the elasticity has been estimated alternatively under the assumption of stationarity (ADL-model) and nonstationarity (single equation and system methods for estimating the cointegrating vector) of the series. The elasticity appears to be significantly greater than zero, its size being between 0.35 and 1.57, with some indication that it is around unity. Thus, this study shows evidence of Wagner’s Law for Germany over the investigated period.