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Fiscal Policy and Long-Run Growth

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  • Mr. Vito Tanzi
  • Mr. Howell H Zee

Abstract

This paper discusses in a systematic and comprehensive way the existing literature on the relationship between the growth of countries’ economies and various public finance instruments, such as tax policy, expenditure policy, and overall budgetary policy, from the perspectives of allocative efficiency, macroeconomic stability, and income distribution. It reviews both the conceptual linkages between each of the instruments and growth and the empirical evidence on such relationships. It broadly concludes that fiscal policy could play a fundamental role in affecting the long-run growth performance of countries.

Suggested Citation

  • Mr. Vito Tanzi & Mr. Howell H Zee, 1996. "Fiscal Policy and Long-Run Growth," IMF Working Papers 1996/119, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1996/119
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    More about this item

    Keywords

    WP; income; public expenditure; capital; private sector; growth theory; physical capital; growth effect; private sector productivity; public finance; fiscal policy variable; rate of change; transmission mechanism; unforeseen public expenditure; income equality; income taxation; externality effect of public expenditure; Human capital; Income distribution; Income inequality;
    All these keywords.

    JEL classification:

    • H00 - Public Economics - - General - - - General
    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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