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Fiscal policy and Growth in The OECD. Volume II: Appendix

Author

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  • de la Fuente, A.

Abstract

This paper investigates the impact of taxes and public expenditures on economic growth using panel data for a sample of OECD countries. Our empirical results suggest that fiscal policy influences growth through three main channels. First,the government contributes directly to factor accumulation through public investment in infrastructure and other assets. Second, public expenditure tends to crowd out private investment by reducing private disposable income and the incentive to save. Third, we find evidence of a sizable negative externality effect of government on the level of productivity.

Suggested Citation

  • de la Fuente, A., 1997. "Fiscal policy and Growth in The OECD. Volume II: Appendix," UFAE and IAE Working Papers 401.97, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  • Handle: RePEc:aub:autbar:401.97
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    Citations

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    Cited by:

    1. Oliveira, Luís & Curto, José Dias & Nunes, João Pedro, 2012. "The determinants of sovereign credit spread changes in the Euro-zone," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(2), pages 278-304.
    2. Richard Kneller, 2000. "The Implications of the Comprehensive Spending Review for the Long-Run Growth Rate: a View From the Literature," National Institute Economic Review, National Institute of Economic and Social Research, vol. 171(1), pages 94-105, January.
    3. Afonso, António & Jalles, João Tovar, 2013. "Growth and productivity: The role of government debt," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 384-407.
    4. Baldacci, Emanuele & Hillman, Arye L. & Kojo, Naoko C., 2004. "Growth, governance, and fiscal policy transmission channels in low-income countries," European Journal of Political Economy, Elsevier, vol. 20(3), pages 517-549, September.
    5. Folster, Stefan & Henrekson, Magnus, 2001. "Growth effects of government expenditure and taxation in rich countries," European Economic Review, Elsevier, vol. 45(8), pages 1501-1520, August.
    6. Pirttilä, Jukka, 2000. "Fiscal policy and structural reforms in transition economies : An empirical analysis," BOFIT Discussion Papers 5/2000, Bank of Finland, Institute for Economies in Transition.
    7. Angel de la Fuente, "undated". "The effect of Structural Fund spending on the Spanish regions: an assessment of the 1994-99 Objective 1 CSF," Working Papers 2003-11, FEDEA.
    8. Folster, Stefan & Henrekson, Magnus, 1999. "Growth and the public sector: a critique of the critics," European Journal of Political Economy, Elsevier, vol. 15(2), pages 337-358, June.
    9. Facchini, François & Melki, Mickaël, 2013. "Efficient government size: France in the 20th century," European Journal of Political Economy, Elsevier, vol. 31(C), pages 1-14.
    10. Martner Fanta, Ricardo & Gonzales, Ivonne & Podestá, Andrea, 2013. "Políticas fiscales para el crecimiento y la igualdad," Macroeconomía del Desarrollo 138, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    11. Sosvilla-Rivero, Simón & Herce, José A., 2008. "European cohesion policy and the Spanish economy: A policy discussion case," Journal of Policy Modeling, Elsevier, vol. 30(3), pages 559-570.
    12. Susan Stone, 2010. "Asia’s Infrastructure Challenges: Issues of Institutional Capacity," Working Papers id:3089, eSocialSciences.
    13. Romero-Ávila, Diego & Strauch, Rolf, 2008. "Public finances and long-term growth in Europe: Evidence from a panel data analysis," European Journal of Political Economy, Elsevier, vol. 24(1), pages 172-191, March.

    More about this item

    Keywords

    FISCAL POLICY ; ECONOMIC GROWTH;

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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