Fiscal Policy and Economic Growth: An Empirical Investigation

William Easterly and Sergio Rebelo ()

No 885, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper describes the empirical regularities relating fiscal policy variables, the level of development and the rate of growth. We employ historical data, recent cross-section data, and newly constructed public investment series. Our main findings are: first, there is a strong association between the development level and the fiscal structure: poor countries rely heavily on international trade taxes, while income taxes are only important in developed economies; second, fiscal policy is influenced by the scale of the economy, measured by its population; and third, investment in transport and communication is consistently correlated with growth while the effects of taxation are difficult to isolate empirically.

Keywords: Development; Fiscal Policy; Growth; Infrastructure; Investment (search for similar items in EconPapers)
JEL-codes: E62 O40 (search for similar items in EconPapers)
Date: 1994-01
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Related works:
Journal Article: Fiscal policy and economic growth: An empirical investigation (1993)
Working Paper: Fiscal Policy and Economic Growth: An Empirical Investigation (1993)
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