Research Paper No. 694

DEMOGRAPHICS AND WAGNER'S LAW. EVIDENCE FROM THE OECD COUNTRIES

by

Nilss Olekalns

May 1999

Department of Economics. University of Melbourne. Parkville Victoria 3052 Australia

ABSTRACT

This paper presents a test of Wagner's Law for the OECD countries using data from 1960 to 1995. Unlike other analyses of Wagner's Law, explicit allowance is made in the paper for the effect of changes in the age distribution of the population on public spending. The results show that the influence of these demographic factors on government expenditure has been substantial and that Wagner's Law holds for transfer payments but not for government consumption.
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