FURTHER EVIDENCE OF WAGNERS-LAW FOR MEXICO - AN APPLICATION OF COINTEGRATION ANALYSIS

This paper, unlike the previous studies dealing with Wagner's Law for Mexico, applies the techniques of unit root testing and cointegration to determine the presence of a long-run link between the share of gove rnment expenditure in real GDP and veal GDP per capita in the Mexican economy during the period 1950-1980. The empirical evidence presented in the paper supports cointegration implying that low frequency moveme nts in the real GDP per capita do explain the long-run swing in the sh are of government expenditure in real GDP in the Mexican economy durin g the period under consideration.