Evidence of Wagner's law from Indian states

In this paper, we test for Wagner's law for 15 Indian states. We consider nine panels of states based on geography and level of economic development. Using panel unit-root, panel-cointegration, and panel-Granger causality analysis, we unravel strong evidence of Wagner's law. However, we find that the Wagner's law relationship is consumption rather than capital expenditure driven. This is a fresh revelation and our results are robust to different model specifications.

► We test for Wagner's law for 15 Indian states. ► Nine panels of states are considered. ► We find strong evidence of Wagner's law. ► This relationship is consumption rather than capital expenditure driven.