Abstract
The analysis of the correlation between fiscal policy and economic growth is a particularly important and highly debated topic in the theoretical and empirical literature. In this study we examine the impact of fiscal policy on economic growth in the eight western Balkan countries for the period 2005-2018. The results suggest that fiscal revenues have a positive impact on the economic growth of the countries under consideration. The empirical results also suggest that tax increases have a relatively low negative impact on the flow of foreign direct investments in these countries. As well as the fact that taxes have an almost negligible impact on the formation of capital in countries taken into consideration that are notable for corruption and high tax evasion. Our study contributes to the debate on the factors that influence economic growth and the impact of different taxes on real GDP growth in Balkan countries.
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