Government expenditure and national income: Causality tests for Turkish economy

The hypotheses concerning with the relations between the government expenditures and the national income have long been the subject of amprical studies in the economy literature.The purpose of this study is to analyse the relationship between the government expenditures, secondary items of the government expenditures and the national income within the frame of Wagnerian and Keynesian hypothesis. The results obtain reveal the fact that the Wagnerian hypothesis explains the relations between the national income and public expenditures in Turkish economy. There is a unilateral causality relationship that tends to develop from the national income to government expenditures, secondary items of the government expenditures and current and investment expenditures. © 2010, INSInet Publication.