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Fiscal Policy and Growth in Developing Asia

Author

Listed:
  • Abdon, Arnelyn May
  • Estrada, Gemma Esther

    (Asian Development Bank)

  • Lee, Minsoo

    (Asian Development Bank)

  • Park, Donghyun

    (Asian Development Bank)

Abstract

In this paper we empirically explore the relationship between fiscal policy and economic growth in developing Asia. The region’s overall level of taxes and government spending are substantially lower than those prevailing in advanced economies. Nevertheless, there are conceptual grounds why fiscal policy, including the composition of taxes and government spending, can have a significant effect on growth, as our empirical analysis shows. In line with economic theory, property taxes have a more benign impact on growth than direct taxes, and spending more on education has a sizable positive impact on growth.

Suggested Citation

  • Abdon, Arnelyn May & Estrada, Gemma Esther & Lee, Minsoo & Park, Donghyun, 2014. "Fiscal Policy and Growth in Developing Asia," ADB Economics Working Paper Series 412, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0412
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    References listed on IDEAS

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    Cited by:

    1. Stoyan Tanchev & Naftaly Mose, 2023. "Fiscal Policy and Economic Growth: Evidence from European Union Countries," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 19-36.
    2. Andrey A. Pugachev, 2022. "Taxation-Based Indicators as a Measure of Income Inequality in Russian Regions," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 8(1), pages 40-53.
    3. Timbul Hamonangan Simanjuntak & Imam Mukhlis, 2017. "The Relation of Fiscal Decentralization, Regional Finance and Social Justice for the Local Development of Indonesia," Applied Economics and Finance, Redfame publishing, vol. 4(1), pages 9-17, January.
    4. Munir, Sidra & Rao, Zia-ur-Rehman & Sana, S, 2019. "Financial Development, Fiscal Policy and Economic Growth: The Role of Institutional Quality in Pakistan," Journal of Finance and Accounting Research, University of Management and Technology, Lahore, vol. 1(2), pages 27-47, August.
    5. Ahmed Waqar Qasim & M. Ali Kemal & Omer Siddique, 2015. "Fiscal Consolidation and Economic Growth: A Case Study of Pakistan," PIDE-Working Papers 2015:124, Pakistan Institute of Development Economics.
    6. Emmanuel Atta Anaman & Samuel Gameli Gadzo & John Gartchie Gatsi & Mavis Pobbi, 2017. "Fiscal Aggregates, Government Borrowing and Economic Growth in Ghana An error correction approach," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 7(2), pages 1-5.
    7. Ekaterina Arapova, 2018. "Determinants Of Household Final Consumption Expenditures In Asian Countries: A Panel Model, 1991-2015," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 18(1), pages 121-140.
    8. S. Maheswaranathan & K.M.N. Jeewanthi, 2021. "Empirical Investigation of the Influence of Fiscal Policy on Sri Lankas Economic Growth from 1990 to 2019," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 9(2), pages 122-131, June.
    9. Stoyan Tanchev, 2021. "Long-run equilibrium between personal income tax and economic growth in Bulgaria," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 7(1), pages 55-67.
    10. Suleiman M. Abbadi & Mohammad Olabi & Haytham Owida & Abdelfattah Abu-Shokor, 2021. "The Impact of Fiscal Policy on Economic Growth in Palestine," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(8), pages 1-51, August.

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    More about this item

    Keywords

    fiscal policy; growth; taxation; government spending; Asia;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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