Presented at the Ist International Symposium on Innovative Approaches in Scientific Studies (ISAS 2018), Kemer-Antalya, Turkey, Apr 11, 2018

SETSCI Conference Proceedings, 2018, 2, Page (s): 36-37 , https://doi.org/

Published Date: 23 June 2018    | 1149     13

In the history of economic thought, different hypotheses have been formed which reveal the interaction between public expenditure and national income. These hypotheses can be decomposed according to their economic and political content. Political content hypotheses have been tried to be explained by economic schools such as Monetarist Theory, Supply Side Economics, Rational Expectations Theory, Public Choice Theory and Constitutional Economics School. The common point of these economic schools is that public spending should not be increased, and if it is to be increased, it must be increased by connecting to certain rules. As for the economic content hypotheses, hypotheses such as Keynesian Approach, Wagner's Law, Baumol's Cost Disease Thesis and Peacock-Wiseman Hypothesis are discussed. The Wagner law, known under the name of German economist Adolph Wagner, is one of the earliest empirical studies attempting to explain the increase in public expenditure and predicts that per capita income in developed country economies will increase the presence of the residual capital in the economy. The main difference between the Keynesian approach and the Wagner Law is direction of cause of national income and public spending. The Keynesian approach suggests that there is a causality relationship from public (investment) spending to the national income, while the Wagner Law suggests that there is a causal causality to the per capita public spending. In this study, between the years 1980-2017 capital expenditure in Turkey, current expenditures, transfer expenditures, internal-external debt interest payments and their general sum total public expenditure expressed as being investigated causal relationship between economic growth. The Toda-Yamamoto method was used as a method for revealing the causal relationship of work. The results of the analysis show that there is no causal relationship between GDP and per capita GDP and investment expenditures, transfer expenditures, current expenditures, internal and external debt interest payments and total public expenditures, which are taken as indicators of economic growth. In this case, Turkey's economy with public spending on defending that there is a positive relationship between economic growth and reveals the Wagner Act did not apply the Keynesian approach. The final conclusions obtained from the non-employment outcome are due to the fact that expenditures made by the government are positively contributing to economic growth, to avoid corruption, which means that   public funding must be reduced, tighter controls must be made on these funds, and public expenditures, which are also transferred to more productive areas that contribute to economic growth I can say.
 

Keywords - Public expenditure, Wagner's Law, Toda-Yamamoto