PUBLIC EXPENDITURES AND ECONOMIC GROWTH: EMPIRIC ANALYSIS OF WAGNER AND KEYNESIAN HYPOTHESIS IN TURKEY

This study, attempts to test Wagner’s Law and Keynesian Hypotheses examined by the relationship between public expenditures and economic growth in Turkey for the 1923 and 2014 period. Stationary of the series have been tested with traditional unit root tests and allowing structural breaks unit root tests. In order to determine long-term relationships between the series that allow multiple structural break Maki (2012) Cointegration Test was used. After finding cointegration relationship, FMOLS Cointegrat？on Coefficient Estimator is used for cointegration coefficients estimated. Finally, Hatemi-J (2012) asymmetric causality method was used. The results obtained in there is long-run relationship between public expenditures and economic growth. Moreover, according to the results of causality analysis, there is a direction of causality is from public expenditures to economic growth. The findings discussed in Turkey in the period of the Wagner Act does not apply, however, it has seen the Keynesian hypothesis supports causality