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Endogenous Growth Model: Evidence From East European Countries

Author

Listed:
  • Mahir Hrnjic

    (International University of Sarajevo, Faculty of Business and Administration, Department of International Business and Finance)

  • Azra Brankovic

    (International University of Sarajevo, Faculty of Business and Administration, Department of International Business and Finance)

Abstract

Fiscal policy is one of the key issues for every government. In the endogenous growth model, fiscal policy is included as a key factor determining the growth of the economy. The focus in this study is placed on eleven East European transitional countries for the period of 1995 to 2014. The model includes both sides of government finance, taxation and expenditures, with expenditures being grouped into homogeneous categories in order to increase the structural efficiency. We find a positive impact on growth for certain government expenditures such as expenditures aimed at improving human resources, property protection and social investment and a negative one for distortionary taxation. The results provide empirical evidence for the theoretical predictions of endogenous growth.

Suggested Citation

  • Mahir Hrnjic & Azra Brankovic, 2017. "Endogenous Growth Model: Evidence From East European Countries," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 15(1), pages 33-46, May.
    • Handle: RePEc:tuz:journl:v:15:y:2017:i:1:p:33-46
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    More about this item

    Keywords

    East European countries; Fiscal Policy; Public Expenditures; Taxation; Economic growth;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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