THE EFFECT OF MACROECONOMIC VARIABLES ON ECONOMIC-GROWTH RATES - A CROSS-COUNTRY STUDY

The paper studies the impact of macroeconomic variables on economic gr owth during the period 1960-87. We find no evidence for the view that countries which pursue macroeconomic policies that result in high infl ation, large budget deficits, and high levels of government consumptio n spending suffer low rates of growth of per capita output. We find we ak evidence, however, for a negative effect of high marginal tax rates on growth. Further, we find strong evidence that countries which achi eve low variability of output growth and which expand their foreign tr ade have high rates of economic growth.