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Does expanding fiscal space lead to improved economic output?

Author

Listed:
  • Akinyele Olawale Daniel

    (Obafemi Awolowo University, Department of Economics)

  • Owonibi Joseph Oluwaseun

    (Northumbria University)

  • Soyoye Olutayo Owolabi

    (Ronik Polytechnic)

  • Al‑Faryan Mamdouh Abdulaziz Saleh

    (Board Member and Head of the Scientific Committee at The Saudi Economic Association)

Abstract

This dynamism between fiscal space and economic output portends a nation’s prosperity. In many emerging economies, fiscal tools remain an effective instrument that stimulates growth and development. Hence, this study examined the impact of fiscal space on economic output in MINT countries from 2000 to 2022 within the Keynesian theory. Considering the spatial heterogeneity of economic output across the globe, this study adopted the Method of Moment Quantile Regression and the Dumitrescu–Hurlin panel causality to answer the question of potential causation among the variables. The study findings show that there is a need for fiscal space expansion to achieve the objectives of the government. However, the expansion of fiscal space should be sector-sensitive to economic output. The government must pay keen attention to the response of specific sectors in order to maintain the dynamism between fiscal space and economic output that portends a nation’s prosperity. The study recommends quality fiscal space expansion to sectors that stimulate and drive growth and development. The study concluded that fiscal spaces through government spending, infrastructural spending and health spending have a significant impact on the economic output in MINT countries. The increasing usage of fiscal stimulus measures to fight global crises should depend on sector-sensitive to economic output.

Suggested Citation

  • Akinyele Olawale Daniel & Owonibi Joseph Oluwaseun & Soyoye Olutayo Owolabi & Al‑Faryan Mamdouh Abdulaziz Saleh, 2025. "Does expanding fiscal space lead to improved economic output?," SN Business & Economics, Springer, vol. 5(12), pages 1-21, December.
    • Handle: RePEc:spr:snbeco:v:5:y:2025:i:12:d:10.1007_s43546-025-00895-8
    DOI: 10.1007/s43546-025-00895-8
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    Keywords

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    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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