Fiscal policy and economic growth

William Easterly, Sergio Rebelo*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

959 Scopus citations

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: (i) 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; (ii) fiscal policy is influenced by the scale of the economy, measured by its population; (iii) investment in transport and communication is consistently correlated with growth; (iv) the effects of taxation are difficult to isolate empirically.

Original languageEnglish (US)
Pages (from-to)417-458
Number of pages42
JournalJournal of Monetary Economics
Volume32
Issue number3
DOIs
StatePublished - Dec 1993

Keywords

  • Development
  • Fiscal policy
  • Growth

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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