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FISCAL STRUCTURES AND ECONOMIC GROWTH: INTERNATIONAL EVIDENCE
Author(s) -
MILLER STEPHEN M.,
RUSSEK FRANK S.
Publication year - 1997
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1997.tb02036.x
Subject(s) - economics , fiscal policy , government expenditure , monetary economics , debt , budget constraint , constraint (computer aided design) , macroeconomics , government debt , government (linguistics) , public finance , microeconomics , mechanical engineering , linguistics , philosophy , engineering
Our paper systematically examines the effects of fiscal structure on economic growth. We find that for developing countries, debt‐financed increases in government expenditure retard growth and tax‐financed increases stimulate growth, while for developed countries, debt‐financed increases in government expenditure do not affect growth and tax‐financed increases lower growth. We impose the government budget constraint on the regression equations so that the precise changes in fiscal policy can be identified (e.g., the effect of a debt‐financed increase in health expenditure), employing a pooled cross‐section, time‐series sample and fixed‐ and random‐effect methods. (JEL 04, E6)