The elasticity of public spending and Wagner's law in Nicaragua

Abstract

The present investigation focuses on studying the elasticity of public spending in Nicaragua in the period 2006-2018, with the aim of being able to demonstrate the impact of this on the development of the country, besides being able to verify the emperical application of Wagner's law. In this sense, the methodologies of Peacok - Wiseman (1968), Musgrave (1969) and Gupta (1967) were applied, which propose specific equations to relate the income variable, population with public expenditure. As a result, the elasticity of public spending with respect to income is 1.09, this relationship indicates a positive contribution to Nicaragua's economic development of public spending growth.