Six interpretations of Wagner's law in Iran, as an oil-exporting country, based on econometric techniques

Over the past few decades, the validity of Wagner’s law has been studied in many countries. According to this law, economic growth has led to the growth of the public sector. Our goal in this paper is to explore the validity of Wagner’s law in Iran during the period 1349-1389 for real oil GDP and non-oil GDP. We used econometric techniques to examine how far Wagner’s law could be applied to Iran’s economy during that period of time. The results suggest that a long-run relationship exists between variables in the case of total GDP. In the case of non-oil GDP, however, Wagner’s law has been applicable in all the six interpretations. According to the error correction model, in the case of non-oil GDP, there is only one valid interpretation of the Wagner law (i.e. Peacock-Wiseman). This result has been confirmed by the Granger causality test. Thus, the validity of Wagner's law is proved in one interpretation in the oil sector and all the six interpretation in the non-oil sector.