KEYNES VERSUS WAGNER - PUBLIC-EXPENDITURE AND NATIONAL-INCOME FOR 3 AFRICAN COUNTRIES

The public expenditure/income hypothesis has long been debated in econ omics. Following Keynes, public expenditure is seen as an exogenous fa ctor to be used as a policy instrument to influence growth. On the oth er hand, Wagner argues that expenditure is an endogenous factor or an outcome, not a cause, of growth in national income. The purpose of thi s paper is to apply both the Granger and Holmes-Hutton statistical pro cedures to test the income-expenditure hypothesis for three African co untries - Ghana, Kenya and South Africa. We find that the hypothesis o f public expenditure causing national income is not supported by the d ata for these African countries.