Peacock and Wiseman's displacement hypothesis: some new long-run evidence for the UK
Abstract:This article presents new evidence on the ability of Peacock and Wiseman's displacement hypothesis to explain temporal increases in the ratio of government expenditure to Gross Domestic Product (GDP) in the UK. Using univariate modelling techniques that are robust to structural changes in the underlying data generating process and a data set extending back to 1836, we find four instances where the ratio of expenditure to GDP displays an evidence of a structural break. Two of these breaks coincide with major social upheavals as predicted by the displacement hypothesis.
Document Type: Research Article
Affiliations: Department of Economics, The University of Melbourne, Melbourne, VIC 3010, Australia
Publication date: April 1, 2010