Redistribution, Growth and Productivity Relationship in Fiscal Policy in Core and Peripheral Countries

Abstract

The main purpose of this study is to analyze the impact of fiscal policies on growth and productivity by dynamic panel data analysis in core and periphery countries. The results of the analysis differed for the core and periphery countries, it was observed that the effect of public expenditures and revenues had a different impact on growth and productivity. Study found that public expenditure and revenues had negative relations on growth performance for both groups. It is considered that government budget policies should be improved on the basis of a more responsive and inclusive way. Regarding to the labor productivity, increasing government expenditures promotes labor productivity in core countries, while it does not in the periphery countries. The impact of inequality on growth and productivity is not found statistically significant in two country groups. Main conclusion is that fiscal policy plays a more active role in the growth and productivity.