The Impact of Fiscal Policy Variables on Output Growth

Philip Gerson

No 1998/001, IMF Working Papers from International Monetary Fund

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.

Keywords: WP; income tax; economic growth; personal income; interest rate; rate of return; Fiscal Policy; Growth; Government Expenditure; Taxation; cost of capital; substitution effect; closed economy; per capita income; production function; infrastructure investment; income elasticity; capital investment; capital goods; income effect; returns to scale; Production growth; Labor supply; Income; Africa; Middle East; North Africa; Sub-Saharan Africa; East Africa (search for similar items in EconPapers)
Pages: 74
Date: 1998-01-01
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Citations: View citations in EconPapers (28)

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