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The Impact of Fiscal Policy Variables on Output Growth

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  • Philip R. Gerson

Abstract

This paper surveys the theoretical and empirical literature on the relationship between taxation and public expenditure and economic growth. Particular attention is paid to the effect of taxation and government expenditure on the supply and productivity of labor and physical capital. Studies suggest that well-targeted government expenditures on health, education, and infrastructure should have a positive impact on growth. By contrast, the impact of taxation on the supplies of labor and capital, and on output growth, is more muted.

Suggested Citation

  • Philip R. Gerson, 1998. "The Impact of Fiscal Policy Variables on Output Growth," IMF Working Papers 98/1, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:98/1
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    Cited by:

    1. Tudor Ion, 2013. "The Implications Of The Fiscal Policies In The Macroeconomic Adjustment," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 68-72, August.
    2. Carlos Mulas-Granados, 2003. "The Trade-Off between Growth & Equality and the Economic Impact of Alternative Fiscal Adjustment Strategies in the EU," European Economy Group Working Papers 20, European Economy Group.
    3. Gupta, Sanjeev & Clements, Benedict & Baldacci, Emanuele & Mulas-Granados, Carlos, 2005. "Fiscal policy, expenditure composition, and growth in low-income countries," Journal of International Money and Finance, Elsevier, vol. 24(3), pages 441-463, April.
    4. 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.
    5. Vratislav Izák, 2011. "The Welfare State and Economic Growth," Prague Economic Papers, University of Economics, Prague, vol. 2011(4), pages 291-308.
    6. Eugenia-Ramona Mara, 2012. "Fiscal Policy in the European Union – Present and Perspectives," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 2(2), pages 156-168, April.
    7. Jorge Martínez Vázquez & Robert M. McNab, 2006. "Fiscal decentralization, macrostability and growth," Hacienda Pública Española, IEF, vol. 179(4), pages 25-49, September.
    8. Anca-Stefania SAVA, 2011. "Romanian Public Expenditures Policy during the Economic Crisis," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 1, pages 27-30.
    9. Benedict J. Clements & Sanjeev Gupta & Emanuele Baldacci & Carlos Mulas-Granados, 2002. "Expenditure Composition, Fiscal Adjustment, and Growth in Low-Income Countries," IMF Working Papers 02/77, International Monetary Fund.
    10. de Castro Alxandre Samy & Goldin, Ian & Pereira da Silva, Luiz A., 2002. "Relative returns to policy reform - evidence from controlled cross-country regressions," Policy Research Working Paper Series 2898, The World Bank.
    11. International Monetary Fund, 2004. "Austria; Selected Issues," IMF Staff Country Reports 04/237, International Monetary Fund.
    12. Donath, Liliana & Milos, Marius Cristian & Milos, Laura Raisa, 2008. "Public investment and economic growth in the European Union member states," MPRA Paper 12954, University Library of Munich, Germany.
    13. Steven P. Cassou & Kevin J. Lansing, 2006. "Tax Reform with Useful Public Expenditures," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(4), pages 631-676, October.
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    16. P. Kiss, Gábor, 2002. "A fiskális jelzőszámok új megközelítésben
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      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 292-319.
    17. Mahdavi, Saeid, 2008. "The level and composition of tax revenue in developing countries: Evidence from unbalanced panel data," International Review of Economics & Finance, Elsevier, vol. 17(4), pages 607-617, October.
    18. Vratislav Izák, 2011. "Vliv vládních výdajů a daní na ekonomický růst (empirická analýza)
      [Government Expenditures and Taxes Influence on the Economic Growth (Empirical Analysis)]
      ," Politická ekonomie, University of Economics, Prague, vol. 2011(2), pages 147-163.
    19. Agáta Drobiszová & Zuzana Machová, 2015. "Vliv fiskální politiky na ekonomický růst v zemích OECD
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      ," Politická ekonomie, University of Economics, Prague, vol. 2015(3), pages 300-316.
    20. Joseph Ntamatungiro, 2004. "Fiscal Sustainability in Heavily Indebted Countries Dependenton Nonrenewable Resources; The Case of Gabon," IMF Working Papers 04/30, International Monetary Fund.
    21. Silvia Bertarelli, 2006. "Public capital and growth," Politica economica, Società editrice il Mulino, issue 3, pages 361-398.
    22. Nicholas Staines, 2004. "Economic Performance Over the Conflict Cycle," IMF Working Papers 04/95, International Monetary Fund.
    23. Stephen Everhart & Jorge Martinez- Vazquez & Robert McNab, 2009. "Corruption, governance, investment and growth in emerging markets," Applied Economics, Taylor & Francis Journals, vol. 41(13), pages 1579-1594.
    24. Milad Zarin-Nejadan, 2011. "Government and Growth," IRENE Working Papers 11-02, IRENE Institute of Economic Research.

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