Economics · Public Expenditure Theories
With reference to Wagner's Law and its empirical validity, examine the following: (I) Wagner's Law postulates that the income elasticity of demand for public expenditure exceeds unity. (II) The Law implies that as per capita income rises, the share of public expenditure in GDP tends to increase. (III) Recent cross-country panel studies have unanimously confirmed Wagner's Law for both developed and developing countries. (IV) A potential explanation for Wagner's Law is that government services like education and infrastructure are luxury goods at early stages of development. Which of these are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1All are correct
- 2I and IV only
- 3I and II only
- 4I, II and IV only✓
Correct answer
I, II and IV only
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