Government spending in developing countries influenced by output and financial risk.
Government spending in developing countries tends to increase with economic output in the short term, but the relationship varies across countries and spending categories. Over the long term, there is a consistent link between government spending and output, with most countries following Wagner's law. Factors like power dispersion and government size can weaken the positive response of spending to output in the short term, while output volatility and financial risk tend to make government spending more cyclical.