This study assesses the effects of fiscal policy on economic growth in a sample of 96 countries from 1990 to 2010. Ordinary Least\nSquares (OLS) and Extreme Bound Analysis are mainly estimated in order to investigate whether public investments, human capital,\nand political stability affect growth controlling for initial output and human capital levels. Furthermore, in this empirical research\nfour subsets of independent variables were used: (a) demographic factors, (b) political determinants, (c) region variables, and (d)\nvariables regarding macroeconomic policy.Empirical results suggest that there is an important difference in the impact of public and\nprivate sector investments on the growth of per capita income.Moreover, political indicators such as corruption control, rule of law,\nand government effectiveness have a high impact on economic growth. Demographic factors, including fertility rate and mortality\ngrowth, as well as several macroeconomic variables, like inflation rate index and government consumption, were estimated to be\nstatistically significant factors of economic performance. Fiscal volatility may also be a new possible channel of macroeconomic\ninstability that leads to lower growth. Policy implications of the findings are discussed in detail.
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