Testing Wagner's Law to analyze the relationship between public expenditure and economic growth in Libya - a benchmark study during the period 1990-2015

Abstract

The analysis of the relationship between public expenditure and economic growth (Libya's average GDP per capita) for the period 1990-2015 in the short and long term, and the analysis of the theory of the relationship between these two variables, Wagner's Law, Which considers causation to be from economic growth (per capita GDP) to government spending, as opposed to the Keynesian proposal that there is a positive causal relationship from government spending to economic growth. Of the They see some analytical tools and some statistical tests to see if the time series values are stable or not. They are generally trend-oriented. They have been shown to be stable after taking the first difference. They show that their degree of integration is first class. Of the Engel-Granger method, the Johansen method, and the Granger methodology for causation. It was clear from this analysis that there is a causal relationship with one aspect of Libya's economic growth to public spending, in line with the Vagner Act.