Testing Wagner's Law in an Oil-Exporting Economy: The Case of Azerbaijan

Abstract

This paper investigates the relationship between public expenditure and economic growth in Azerbaijan, including impact of oil prices. Applying time series econometrics, such as unit roots and bounds testing approaches, and autoregressive distributed lag techniques the analysis in this study is based on quarterly data during the period from 2001 to 2010. The results of the research support the validity of Wagner's hypothesis in the oil-exporting economy and the existence of both long and short run causality among the cointegrated variables. © 2013 CEEUN.