The Relationship between Economic Growth and Government ‎Spending: A Case Study of OIC Countries

Heri Sudarsono Fakultas Ekonomi Universitas Islam Indonesia Jalan Condongcatur Lingkar Utara Yogyakarta Indonesia Diterima 20 Oktober 2010 /Disetujui 5 Nopember 2010 Abstract: This paper presents the results for ‎testing for causal relationship ‎between economic growth and ‎goverment spending for OIC ‎countries covering the time series ‎data 1970~2006. There are usually ‎two propositions regarding the ‎relation between economic growth ‎and govern­ment spending: ‎Wagner’s Law states that as GDP ‎grows, the public sector tends to ‎grow; and the Keynesian ‎framework postulates that public ‎expenditure causes GDP to grow.

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