IDEAS home Printed from https://ideas.repec.org/p/lev/wrkpap/wp_883.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.levyinstitute.org/pubs/wp_883.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. anonymous, 1995. "Does the bouncing ball lead to economic growth?," Regional Update, Federal Reserve Bank of Atlanta, issue Jul, pages 1-2,4-6.
    3. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    4. Johanna Vogel, 2015. "The two faces of R&D and human capital: Evidence from Western European regions," Papers in Regional Science, Wiley Blackwell, vol. 94(3), pages 525-551, August.
    5. Aurora Teixeira & Natércia Fortuna, 2003. "Human Capital, Innovation Capability and Economic Growth," FEP Working Papers 131, Universidade do Porto, Faculdade de Economia do Porto.
    6. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    7. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
    8. Amitrajeet A. Batabyal & Peter Nijkamp, 2013. "Human capital use, innovation, patent protection, and economic growth in multiple regions," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 22(2), pages 113-126, March.
    9. Xavier Sala-I-Martin, 1997. "Transfers, Social Safety Nets, and Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 81-102, March.
    10. Erik Canton & Bert Minne & Ate Nieuwenhuis & Bert Smid & Marc van der Steeg, 2005. "Human capital, R&D, and competition in macroeconomic analysis," CPB Document 91, CPB Netherlands Bureau for Economic Policy Analysis.
    11. Rodrick Wallace, 2013. "A new formal approach to evolutionary processes in socioeconomic systems," Journal of Evolutionary Economics, Springer, vol. 23(1), pages 1-15, January.
    12. Francesco Cinnirella & Jochen Streb, 2013. "The Role of Human Capital and Innovation in Prussian Economic Development," CESifo Working Paper Series 4391, CESifo.
    13. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kashif Islam & Ahmad Raza Bilal & Syed Anees Haider Zaidi, 2022. "Symmetric and asymmetric nexus between economic freedom and stock market development in Pakistan," Economic Change and Restructuring, Springer, vol. 55(4), pages 2391-2421, November.
    2. Ayoub Zeraibi & Atif Jahanger & Muhammad Usman & Daniel Balsalobre-Lorente & Tomiwa Sunday Adebayo & Mustafa Kamal, 2024. "The role of fiscal decentralization and technological innovations in curbing sulfur dioxide emissions: formulating SDGs policies for China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(8), pages 19659-19684, August.
    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.
    4. Chakraborty, Lekha, 2020. "Macroeconomic Policy Coherence for SDG 2030: Evidence from Asia Pacific," Working Papers 20/292, National Institute of Public Finance and Policy.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Horst Hanusch & Lekha Chakraborty & Swati Khurana, 2016. "Public Expenditures, Innovation and Economic Growth: Empirical Evidence from G20 Countries," Discussion Paper Series 329, Universitaet Augsburg, Institute for Economics.
    2. Claude Diebolt, 2006. "Croissance et éducation," Working Papers 06-10, Association Française de Cliométrie (AFC).
    3. Taylor, Alan M., 1999. "Sources of convergence in the late nineteenth century," European Economic Review, Elsevier, vol. 43(9), pages 1621-1645, October.
    4. Xavier Pautrel, 2001. "Formation dans la production, capital humain, innovation et croissance," Economie & Prévision, La Documentation Française, vol. 0(4), pages 171-185.
    5. Middendorf Torge, 2006. "Human Capital and Economic Growth in OECD Countries," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(6), pages 670-686, December.
    6. Ilkhom SHARIPOV, 2016. "ECONOMIC GROWTH IN THE EU’S EaP COUNTRIES: DETERMINANTS AND PROSPECTS," EURINT, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3, pages 169-187.
    7. MARTINS, Ana Paula, 2015. "Increasing Returns And Endogenous Growth: Market Size And Taste For Variety," Academica Science Journal, Economica Series, Dimitrie Cantemir University, Faculty of Economical Science, vol. 1(5), pages 3-33, June.
    8. Norman Gemmell, 2001. "Fiscal Policy in a Growth Framework," WIDER Working Paper Series DP2001-84, World Institute for Development Economic Research (UNU-WIDER).
    9. Long, N.V. & Wong, K.Y., 1996. "Endogenous Growth and International Trade: A Survey," Working Papers 96-07, University of Washington, Department of Economics.
    10. repec:eee:labchp:v:3:y:1999:i:pc:p:2943-2984 is not listed on IDEAS
    11. Amal MATALLAH & Amal MATALLAH, 2017. "Does fiscal policy spur economic growth? Empirical evidence from Algeria," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(612), A), pages 125-146, Autumn.
    12. Kwack, Sung Yeung & Lee, Young Sun, 2006. "Analyzing the Korea's growth experience: The application of R&D and human capital based growth models with demography," Journal of Asian Economics, Elsevier, vol. 17(5), pages 818-831, November.
    13. Jhy-Yuan Shieh & Wen-Ya Chang & Ching-Chong Lai, 2007. "An Endogenous Growth Model Of Capital And Arms Accumulation," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(6), pages 557-575.
    14. Canton, E.J.F., 1997. "Fiscal Policy in a Stochastic Model of Endogenous Growth," Discussion Paper 1997-63, Tilburg University, Center for Economic Research.
    15. John Ssozi & Simplice A. Asongu, 2016. "The Comparative Economics of Catch-up in Output per Worker, Total Factor Productivity and Technological Gain in Sub-Saharan Africa," African Development Review, African Development Bank, vol. 28(2), pages 215-228, June.
    16. Loayza, Norman V., 1996. "The economics of the informal sector: a simple model and some empirical evidence from Latin America," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 45(1), pages 129-162, December.
    17. Rensman, Marieke, 1996. "Economic growth and technological change in the long run : a survey of theoretical and empirical literature," Research Report 96C10, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    18. Ozturk, Ayse, 2016. "Examining the economic growth and the middle-income trap from the perspective of the middle class," International Business Review, Elsevier, vol. 25(3), pages 726-738.
    19. Hüseyin Sen & Ayse Kaya & Baris Alpaslan, 2015. "Education, Health, and Economic Growth Nexus: A Bootstrap Panel Granger Causality Analysis for Developing Countries," Economics Discussion Paper Series 1502, Economics, The University of Manchester.
    20. repec:zbw:rwidps:0030 is not listed on IDEAS
    21. Günther Rehme, 2007. "Education, Economic Growth and Measured Income Inequality," Economica, London School of Economics and Political Science, vol. 74(295), pages 493-514, August.
    22. Antonio Paradiso & Saten Kumar & B. Bhaskara Rao, 2013. "The growth effects of education in Australia," Applied Economics, Taylor & Francis Journals, vol. 45(27), pages 3843-3852, September.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lev:wrkpap:wp_883. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Elizabeth Dunn (email available below). General contact details of provider: http://www.levyinstitute.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.