THE INFLUENCE OF TAX AND EXPENDITURE POLICIES ON ECONOMIC-GROWTH IN THE NETHERLANDS - AN EMPIRICAL-ANALYSIS

This paper explores the influence of government policies in explaining output, employment and investment in The Netherlands during the perio d 1966-1989. The paper develops an empirical macroeconomic model estim ated with annual data relating to the period 1958-1989. It finds that restrictive fiscal policies in the eighties have had adverse short-ter m effects on output and employment. Furthermore, the drop in the rate of increase in tax and social security contribution rates in this peri od has boosted output, employment and investment. However, the shift i n public expenditure from investment to consumption has exerted a nega tive impact on these variables, largely offsetting the positive impact of the tax policies.