Fiscal Policy and Long-Run Growth

Vito Tanzi and Howell Zee

No 1996/119, IMF Working Papers from International Monetary Fund

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.

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 (search for similar items in EconPapers)
Pages: 36
Date: 1996-10-01
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Citations: View citations in EconPapers (23)

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Journal Article: Fiscal Policy and Long-Run Growth (1997)
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