Public Spending for Long-Run Growth: A Practitioners’ View
AbstractBy financing public goods and services that enhance productivity and promote private investment, public spending is widely believed to be critical for long-run growth. Such effects are distinct from any short-run Keynesian response to a public spending stimulus. While a short-run response generally operates through aggregate demand, long-run growth effects alter aggregate supply conditions. While academic literature generally supports the belief that public spending promotes growth in the long run, understanding which public expenditure allocations can trigger such effects in a particular country setting is challenging in practice. The objective of this note1 is to review the trade-offs faced by fiscal policy makers in developing countries who are considering using public expenditure policy as an instrument to promote longrun growth, provide guidance from the empirical literature, and review the types of data sources that are helpful in this context.
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Bibliographic InfoArticle provided by The World Bank in its journal Economic Premise.
Volume (Year): (2012)
Issue (Month): 99 (December)
Find related papers by JEL classification:
- E0 - Macroeconomics and Monetary Economics - - General
- E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H4 - Public Economics - - Publicly Provided Goods
- H6 - Public Economics - - National Budget, Deficit, and Debt
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