How Do National Policies Affect Long Run Growth

This paper explores how fiscal policy can affect medium- to long-term growth. It identifies the main channels through which fiscal policy can influence growth and distills practical lessons for policymakers. The particular mix of policy measures, however, will depend on country-specific conditions, capacities, and preferences. The paper draws on the Fund’s extensive technical assistance on fiscal reforms as well as several analytical studies, including a novel approach for country studies, a statistical analysis of growth accelerations following fiscal reforms, and simulations of an endogenous growth model.

This paper discusses in a systematic and comprehensive way the existing literature on the relationship between the growth of countries’ economies and various public finance instruments, such as tax policy, expenditure policy, and overall budgetary policy, from the perspectives of allocative efficiency, macroeconomic stability, and income distribution. It reviews both the conceptual linkages between each of the instruments and growth and the empirical evidence on such relationships. It broadly concludes that fiscal policy could play a fundamental role in affecting the long-run growth performance of countries.

This paper investigates the short-term effects of fiscal consolidation on economic activity in OECD economies. We examine the historical record, including Budget Speeches and IMFdocuments, to identify changes in fiscal policy motivated by a desire to reduce the budget deficit and not by responding to prospective economic conditions. Using this new dataset, our estimates suggest fiscal consolidation has contractionary effects on private domestic demand and GDP. By contrast, estimates based on conventional measures of the fiscal policy stance used in the literature support the expansionary fiscal contractions hypothesis but appear to be biased toward overstating expansionary effects.

This paper surveys the theoretical and empirical literature on the relationship between taxation and public expenditure and economic growth. Particular attention is paid to the effect of taxation and government expenditure on the supply and productivity of labor and physical capital. Studies suggest that well-targeted government expenditures on health, education, and infrastructure should have a positive impact on growth. By contrast, the impact of taxation on the supplies of labor and capital, and on output growth, is more muted.

Academic Paper from the year 2019 in the subject Business economics - Business Ethics, Corporate Ethics, grade: 2.1, University of Washington (Economics), course: Economics, language: English, abstract: This paper presents impacts of business policies on economic growth and gives advices for creating a strategic plan. A strategic plan is used to set business priorities, inform the decisions, and guide the business operations of various organizations. The strategic plan ensures that every member of an organization plays their role in the achievement of a common goal that effectively accommodates the changes in both internal and external business environments. It’s also used as a communication tool to inform all the stakeholders of the business objectives and the action plan for achieving those objectives. To develop an effective business plan, it’s important that all aspects of internal and external business environment are taken into consideration. This is due to the fact that these factors such as inflation, interest rate, the Gross Domestic Product, and trade balance significantly affect the ability of the organization to attain its set objectives according to the business plan. Monetary policies are used by the government to regulate the value of a country’s currency such that it remains stable at all times. The monetary policy is also concerned with a reduction in the rate of unemployment which significantly affects a country Gross Domestic Product. Therefore, a country that wishes to achieve economic milestones should be in a position to change its monetary policies so as to control important factors such as the rate of inflation. Changing these policies gives the country full control over various nominal variables such as the exchange rate and money supply so as to increase the rate of economic growth especially with regard to imports and exports. As a result, the monetary policies set by a country have consequences on the economic growth of that country.

This paper reviews the theoretical and empirical aspects of the relationship between macroeconomic policies and the long-run rate of growth of GNP. The macroeconomic policies examined include fiscal policies, monetary and interest rate policies, external policies, and policies to reform the goods and labor markets, including adjustments of producer prices and wages. In general, the effects of these policies on growth operate directly or indirectly through their influence on investment in physical and human capital, and on factor productivity. The available empirical evidence confirms the effects of specific macroeconomic and financial policies on long-run growth.