FISCAL-POLICY AND LONG-RUN GROWTH

This paper discusses in a systematic and comprehensive way the existin g literature on the relationship between rite growth of countries' eco nomies and various public finance instruments, such as tax policy, exp enditure policy, and over-all budgetary policy, from the perspectives of allocative efficiency, macroeconomic stability, and income distribu tion. it reviews both the conceptual linkages between each of the inst ruments and growth and the empirical evidence of such relationships. T he paper broadly concludes that fiscal policy could play a fundamental role in affecting the long-run growth performance of countries.