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Quality of public finances and growth

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  • Afonso, António
  • Ebert, Werner
  • Schuknecht, Ludger
  • Thöne, Michael

Abstract

In this paper we review the linkages between the quality of public finances, that is, the level and composition of public expenditure and its financing via revenue and deficits, and economic growth. We review the various channels through which public finances affect growth and its underlying determinants (institutional framework, employment, savings and investment, innovation). The paper addresses the approaches used to assess the performance and efficiency of public spending, and surveys the empirical findings on the impact of fiscal variables on sustained economic growth. JEL Classification: H50, O40

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Bibliographic Info

Paper provided by European Central Bank in its series Working Paper Series with number 0438.

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Date of creation: Feb 2005
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Handle: RePEc:ecb:ecbwps:20050438

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Keywords: Efficiency; Growth; quality of public finances;

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