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Fiscal Policy, Economic Growth and Innovation: An Empirical Analysis of G20 Countries

Author

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  • Horst Hanusch
  • Lekha S. Chakraborty
  • Swati Khurana

Abstract

This paper analyzes the effectiveness of public expenditures on economic growth within the analytical framework of comprehensive Neo-Schumpeterian economics. Using a fixed-effects model for G20 countries, the paper investigates the links between the specific categories of public expenditures and economic growth, captured in human capital formation, defense, infrastructure development, and technological innovation. The results reveal that the impact of innovation-related spending on economic growth is much higher than that of the other macro variables. Data for the study was drawn from the International Monetary Fund's Government Finance Statistics database, infrastructure reports for the G20 countries, and the World Development Indicators issued by the World Bank.

Suggested Citation

  • Horst Hanusch & Lekha S. Chakraborty & Swati Khurana, 2017. "Fiscal Policy, Economic Growth and Innovation: An Empirical Analysis of G20 Countries," Economics Working Paper Archive wp_883, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_883
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    References listed on IDEAS

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    Cited by:

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    2. Chakraborty, Lekha, 2020. "Macroeconomic Policy Coherence for SDG 2030: Evidence from Asia Pacific," Working Papers 20/292, National Institute of Public Finance and Policy.
    3. G. M. Aubakirova & F. M. Isatayeva, 2021. "New Approaches to the Construction of a Diversified Economy: the Experience of Kazakhstan," Studies on Russian Economic Development, Springer, vol. 32(6), pages 712-718, November.

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    More about this item

    Keywords

    Fiscal Policy; Public Expenditure; Defense; Innovation; Growth; Neo-Schumpeterian Economics;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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