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Fiscal Policy and Economic Performance: A Review

Author

Listed:
  • George E. Halkos

    (Laboratory of Operations Research, Department of Economics, University of Thessaly, Volos, Greece)

  • Epameinondas A. Paizanos

Abstract

The economic implications of government expenditure have been shown to be significant and broad. In particular, government spending has been shown to enhance long-run economic growth by increasing the level of human capital and Research and Development (R&D) expenditure, and by improving public infrastructure. On the other hand, there is evidence that a greater size of government spending may be less efficient and therefore not necessarily associated with a better provision of public goods and higher levels of economic growth. Moreover, it is likely that the size of government expenditure and its composition are associated with key aspects of the quality of growth, such as income inequality and environmental sustainability. This paper presents a review of the theoretical and empirical literature on the relationship between fiscal policy and economic activity, both in terms of long-run economic growth and short-term output fluctuations. In general, empirical evidence on these relationships is not robust and remains inconclusive.

Suggested Citation

  • George E. Halkos & Epameinondas A. Paizanos, 2016. "Fiscal Policy and Economic Performance: A Review," Journal of Reviews on Global Economics, Lifescience Global, vol. 5, pages 1-15.
    • Handle: RePEc:lif:jrgelg:v:5:y:2016:p:1-15
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    File URL: http://www.lifescienceglobal.com/independent-journals/journal-of-reviews-on-global-economics/volume-5/85-abstract/jrge/2219-abstract-fiscal-policy-and-economic-performance-a-review
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    Citations

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    Cited by:

    1. Zhenyu Qi & Siying Yang & Dawei Feng & Wenzhi Wang, 2022. "The impact of local government debt on urban environmental pollution and its mechanism: Evidence from China," PLOS ONE, Public Library of Science, vol. 17(3), pages 1-22, March.
    2. George, Halkos E. & George, Papageorgiou J. & Emmanuel, Halkos G. & John, Papageorgiou G., 2019. "Environmental regulation and economic cycles," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 172-177.

    More about this item

    Keywords

    Fiscal policy; Economic growth; Government Expenditure; Taxation;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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