Abstract:

In this study, the relationship between public expenditures and economic growth was examined within the scope of Wagner's law and Keynesian hypothesis in Turkey for the period 2006:1-2021:4 via the Engle-Granger cointegration test and the Granger causality test. In the study, total, transfer, investment, current, defense, education, health, and social protection expenditures were preferred as proxies of public expenditures. The relationship of each of the variables with economic growth was examined separately. According to the the Engle-Granger cointegration test results, it was determined that there is a cointegration relationship between economic growth and total public expenditures, current expenditures, transfer and social protection expenditures. The findings obtained from the Error Correction model have shown that both Wagner's law and Keynesian hypothesis are valid, but they vary according to the type of expenditure. The Granger causality test results have indicated that Keynesian hypothesis could be confirmed only for education and investment expenditures in the short run.

Keywords: