Role Of Fiscal Policy Research Articles (Page 6)

The purpose of this research was to review the influence or effect of fiscal policies on Ghana’s development based on a survey of the available literature. This was accomplished by conducting a systematic internet search using an array of keywords—fiscal policy, fiscal policy in Ghana, challenges of fiscal policy in Ghana, challenges of fiscal. We find that there is a large body of empirical research on the impact of fiscal policy on growth in Ghana, with varied results based on cross-sectional, time-series, and panel data. The economy benefited from government investments, transfer payments, and tax income, while government consumption had a negative impact.

This research scrutinizes the effectiveness of government fiscal policies in cultivating sustainable economic growth in India. Drawing on an extensive dataset spanning over a decade, the study meticulously examines crucial fiscal variables, encompassing Gross Domestic Product (GDP) growth, inflation rates (Consumer Price Index and GDP deflator), and real interest rates. Through rigorous statistical analysis, elucidate the intricate relationships between these variables, casting light on the nuanced impact of fiscal measures on the Indian economy. Findings underscore the pivotal role of fiscal policies in shaping economic trajectories. Notably, a substantial negative correlation between real interest rates and economic growth underscores the critical importance of interest rate management. Furthermore, positive correlations between GDP growth and inflation rates signify the delicate balance required for optimal economic stability. This research delves deep into the contextual nuances, considering historical events and policy changes that have influenced these relationships. This research not only contributes empirical insights to the field of finance but also furnishes actionable recommendations for policymakers. By comprehending the intricate interplay of fiscal variables, policymakers can craft more targeted and effective strategies, fostering sustainable economic growth and ensuring the long-term prosperity of the Indian economy.

In the article, theoretical provisions of the fiscal policy role by supporting the functioning of the system of the economy state regulation are analyzed. Within research, special attention is paid to the description of the essence of the fiscal policy. It is proposed to consider this type of policy as apurposeful activity of the bodies of state authorities in the formation and use of financial resources to fulfill their own responsibilities by them. It is established that the defined type of the policy plays one of the key roles in the economic policy implementation, and fiscal tools compile the basis of theregulatory impact of the bodies of state authorities and local self-regulation on economic behavior of economic entities.  The purpose of the fiscal policy, its tasks, and functions are considered. Functions, in first turn, include the following ones: stabilizing, budget, distributing, regulatory, control. As well, principles of the fiscal policy are specified.To deepen the understanding of the fiscal policy nature within the article, the analysis of its individual types is carried out. They include as follows: automatic and discretion fiscal policies, their content is considered. Moreover, the essence of the restrictive and stimulating policies are researched, peculiarities of their application in various conditions of economic development of the country are determined.Serious attention is paid to the description of the fiscal policy role in the implementation of the national economic policy and its meaning to provide effective functioning of the state regulation system of the national economy development. In particular, the main components of the structure of theeconomic policy are researched and it is established that the fiscal policy plays one of the key roles in line with the monetary and regulatory policies by providing economic development of the countries, formation of the conditions namely for stable functioning of economic entities in long-termperspective, mechanisms of the influence of the bodies of state authorities and local self-regulation on the development of economic systems of various types within the national economy.

The study aims at investigating the relative effectiveness of monetary and fiscal policies on economic growth of Jordan during the period 1977- 2019 using Autoregressive Distributed Lag (ARDL) methodology. The variables of the study were integrated of different orders as indicated by Augmented Dickey-Fuller (ADF) unit root test. Bounds cointegration test revealed that there is a cointegrated long-run relationship between the study variables. The study results showed that there is a statistically significant positive long-run relationship between real GDP and each of broad money supply and total government expenditures. Moreover, the long-run coefficient of money supply was much greater than that of government expenditures, implying that the effectiveness of monetary policy is higher than that of fiscal policy in affecting the economic performance, and both policies can be implemented to stimulate the economic growth in Jordan. Therefore, the study recommends the Jordanian government to improve the management of fiscal policy by controlling its current expenditures, increasing the productive investments, as well as applying a comprehensive tax reform in order to strengthen the role of fiscal policy in boosting the economic growth.

Private investment is one of the major channels through which fiscal policy affects economic growth of a country. Endogenous growth theory for instance recognizes the effect of fiscal policy on economic growth through its impact on private investment although the impact varies with the type of fiscal policy instruments employed. Considering the significant role of fiscal policy on the development of private sector investment, this study has attempted to assess the effect of fiscal policy on private investment in developing economies by using evidence from Ethiopia. The study implemented a modified flexible accelerator model as a theoretical framework to explain the relationship between the study variables. The study applied the ARDL model to estimate the parameters. The study result revealed that disaggregated fiscal policy measures have a diverse effect on private investment. Specifically, government fiscal policy reforms and import duties have a significant crowding in effect while capital expenditure, recurrent expenditure and budget deficit have a crowding out effect. The study finding implies that government should have to reconsider its capital and recurrent expenditure in a way that positively contributes to the development of private investment.

Fiscal policy is a crucial government tool for influencing and managing the national economy and creating a strong incentive for low carbon investment. Previous literature has reputable evidence that improving fiscal policy enhances environmental quality. However, the literature fails to classify the exact turning level (threshold point) below/above which the association may be negative or positive. In this regard, this research investigates the nexus between fiscal policy, foreign direct investment, financial development, trade openness, urban population, gross capital formation, labour force, and CO2 emissions in the era of globalization. The panel data set contained 105 countries over the period from 1990 to 2016. The empirical findings are estimated through linear and nonlinear panel data approaches such as fully modified ordinary least square and panel threshold regression. The subsequent findings are established: first, fiscal policy and globalization significantly increase environmental pollution. Second, the empirical results confirm the existence of the pollution haven hypothesis (PHV). Third, financial development and gross fixed capital formation are also considered some of the most crucial indicators to increase pollution levels. Fourth, trade openness, urban population, and labour force improve environmental quality. Fifth, panel threshold regression discovers that countries maintain a minimum level of fiscal policy at −1.2889. Based on these empirical findings, this study suggests that policymakers and governments of these countries should take steps to restructure their industrial sector and design macroeconomic-level carbon-free policies to support the implementation of low-energy-intensive and lower carbon production technologies.

The Role of Fiscal Policy on Economic Growth A Study of Ghana: An Empirical Literature

Fiscal policy aims primarily at controlling aggregate demand but in developing countries, the aims and objectives of fiscal policy are much extended. Due to the important role of fiscal policy in maintaining macroeconomic stability, it must be carefully designed in a way to accelerate investment, on one hand, and on the other hand, it must redistribute the resources from socially less desirable to more desirable investment channels. The efficient allocation and distribution of resources can help to narrow the income gap and economic discrepancies among different social groups. Instead, if the resource distribution is politicized, the whole picture would be reversed. The present study analyzes the objective of equitable distribution of income and wealth with the practice of political distribution in Pakistan. Despite the objective of equitable distribution of income and wealth, political actors from federal and provincial governments spend public funds to achieve political goals rather than on development-oriented programs. These investments secure the political interests of those actors. Also, the selection of projects and the provision of subsidies are politicized.

This paper considers both secular and medium-run trends to argue that the US economy was already vulnerable to shocks before the COVID-19 crisis. Long-run trends have shown a pattern of secular stagnation and increasing inequality since the 1980s, while the economy has displayed hysteresis during the sluggish recovery from the Great Recession. The immediate policy response through the Coronavirus, Relief and Economic Security (CARES) Act highlighted the coordinating role of fiscal policy on the economy, but also showcased limits, especially with regard to the paycheck protection program. The historical trajectory of the US economy before the COVID-19 crisis cast serious doubts on recent cries of ‘overheating’ and inflationary pressures that should supposedly arise from the $1.9 trillion relief package just signed into law by President Biden. Projecting forward to the long run, redistribution policies may provide useful first steps in reversing the trends of rising inequality and declining productivity growth that the US economy has seen over the last few decades.

ABSTRACT This paper examines the effects of fiscal and monetary policies on the real sector under globalization by using the dynamic panel System-Generalized Method of Moments estimator technique with a sample of 79 countries during the 1998–2018 period. The paper primarily aimed to evaluate the roles of fiscal and monetary policies on the real sector by considering aspects of globalization. The results demonstrate that globalization has significantly distorted the role of expansionary fiscal policy on the real sector. Further, the role of monetary policy on the real sector has remained reliable under globalization in developing countries but not in developed countries. Moreover, the effects of economic globalization through trade and financial liberalization on the reliability of fiscal and monetary policies were also investigated. In accordance with the effects of globalization, trade and financial liberalization were found to distort the role of fiscal policy on the real sector; however, under trade liberalization, monetary policy was more effective for the industrial and service sectors than fiscal policy.

Contrary to Keynes’ and Duesenberry’s consumption theories, absolute or relative income plays a minimal role in the life-cycle and in the permanent-income hypotheses. It plays an even lesser role in contemporary orthodox consumption functions which are extensions of these two theories in a rational-expectations framework. As a result, the theoretical effectiveness of fiscal policy for raising output is greatly diminished. The paper argues that Keynes’ and Duesenberry’s approaches were marginalised not because of their empirical or theoretical shortcomings, but because of emphasising the psychological and social influences on consumption patterns, and because of not employing the intertemporal utility maximising framework.

Relevance of the research topic. In modern conditions, fiscal policy is an important tool for regulating economic processes, stimulating economic growth. Important factors influencing the vectors of fiscal policy are financial and economic endogenous and exogenous risks due to trends in national economic development and the intensification of globalization. Accordingly, the assessment of economic processes, financial and economic risks is an important condition for the formation and implementation of effective fiscal policy. Formulation of the problem. In the context of deteriorating trends in national economic development and intensification of globalization processes, important tasks are: substantiation of priority areas of fiscal policy, in particular on the formation of budget revenues and expenditures, ensuring economically justified level of raising social standards and public capital investment. At the same time, the basis of the quality level of fiscal policy implementation is its coherence with the strategic priorities of the country's socio-economic development. Analysis of recent research and publications. The issue of formation and implementation of fiscal policy is quite common in research. These are the works of famous domestic and foreign scientists: J. Keynes, P. Samuelson, J. Stiglitz, V. Tanzi, S. Kucherenko, L. Lysyak, L. Levaeva, I. Lukyanenko, M. Pasichny, I. Chugunov and others. Selection of unexplored parts of the general problem. The above issues are relevant in connection with the deteriorating trend of economic development, the violation of fiscal stability and balance, which requires a number of specific tasks related to the formation and implementation of effective fiscal policy. Problem statement, research goals. The objectives of the study are: to reveal the role of fiscal policy in regulating socio-economic processes; substantiate the peculiarities of the formation and implementation of fiscal policy in modern conditions; to analyze and evaluate the main tax revenues of the consolidated budget of Ukraine. The purpose of the study is to reveal the directions of fiscal policy as a component of economic development. Method or methodology of the study. The article uses a set of research methods: a systematic approach, statistical analysis, structuring, synthesis, etc. Presentation of the main material (results of work). The role of fiscal policy in the regulation of socio-economic processes is revealed. The peculiarities of the formation and implementation of fiscal policy in modern conditions are substantiated. The analysis and estimation of the basic tax receipts of the consolidated budget of Ukraine is carried out. The directions of fiscal policy as a component of economic development are determined. Field of application of results. The results of the study can be used in the formation and implementation of fiscal policy. Conclusions in accordance with the article. The validity of the implementation of fiscal policy is an important condition for achieving national socio-economic interests. In order to increase the effectiveness of fiscal policy as a component of economic development, at this stage, it is advisable to: ensure financial stability and implement measures to reduce the risk of imbalances, including modernization of infrastructure and basic sectors of the economy, effective protection of the domestic market and export support; stimulating investment processes in the economy.

Abstract While realising the macroeconomic significance of oil price fluctuations, this research examines the role of fiscal policy under changing dynamics of energy market for selected oil‐exporting countries. We specify a non‐linear threshold structural vector autoregression model which constitutes policy variables such as general government expenditures and primary fiscal balance and macroeconomic indicators such as real GDP growth and the inflation rate. To capture the energy market dynamics, this research selects Brent crude oil price as threshold variable and segregates the sample period 1991‐2019 as ‘high’ and ‘low’ oil price regimes. While using non‐linear generalised impulse response functions, we find that under higher oil price regime, an increase in government expenditures and reduction in fiscal deficit have larger multiplier effect to enhance output growth in most of the sampled countries. In addition, this research identifies larger inflationary effects of an increase in government expenditures and fiscal deficit under higher oil price regime for all countries except Canada. However, under a higher oil price regime, a fiscal deficit induced output growth, and under a lower oil price regime, a reduction in government expenditure brings inflation in Saudi Arabia. Furthermore, this research provides an alternative measure of threshold crude oil price for the sampled countries to their accounting‐based concept of fiscal break‐even price.

The issue of fiscal policy affecting interest rates is ever-evolving that depends on the structure of the economy and the strength of the financial markets. Hence, it is necessary to continuously validate this relationship between fiscal policy and interest rates. Towards this, the present paper tries to empirically examine and understand the transmission channels through which fiscal policy could affect short, medium, and long-term interest rates in India using Structural Vector Autoregression (SVAR) and Toda-Yamamoto causality approaches. Our results suggest that fiscal policy has a marginal impact on interest rates in the short run, while it has a larger positive impact on interest rates in the long run through the inflation route. In terms of the policy, in the long run, there is a need for containing the structural part of the fiscal deficit within the fiscal consolidation (Fiscal Responsibility and Budget Management Act) framework in India.

Belt and road initiative (BRI) contains the transport, construction, and energy‐related projects to push the wheel of economic development of BRI's participant at the cost of ecological consequences. These sectors are highly energy‐intensive and upsurge the CO2 emission. Energy efficiency and renewable energy are considered two essential solutions to control CO2 emissions. Energy efficiency is proficient in yielding energy and demand savings that can relocate the electricity generation from primary energy resources, that is why, nowadays, energy efficiency is considered as an energy resource worldwide. Fiscal policy is a vital policy tool regarding energy policies related to production, growth, distribution, and energy consumption. Therefore, this study investigates the relationship between energy efficiency and CO2 emission in light of the fiscal policy index for BRI countries. The results infer that energy efficiency and fiscal policy deteriorate the CO2 emission. On the other side, FDI and GDP will lead to an increase in CO2 emission. This study provides useful insights for policymakers on how to take preventive and remedial measures to reduce CO2 emissions in different sectors and demonstrated that technology in the energy sector could help to mitigate climate change through energy efficiency. Furthermore, future research can be carried out on how digitalization, energy efficiency monitoring processes, and management process can help to mitigate.

This paper studies whether fiscal policy plays a stabilizing role in the context of import food price shocks. More precisely, the paper assesses whether fiscal policy dampens the adverse effect of import food price shocks on household consumption. Based on a panel of 70 low and middle-income countries over the period 1980-2012, the paper finds that import price shocks negatively and significantly affect household consumption, but this effect appears to be mitigated by discretionary government consumption, notably through government subsidies and transfers. The results are particularly robust for African countries and countries with less flexible exchange rate regimes.

Global crisis due to Corona Virus Disease (COVID) 19 pandemic motivates research concerning the role of fiscal policy in the crisis. Lessons learned on success dan failed factor of fiscal in responding crisis is of greater importance. This research employs review literature to identify the current status of literature on the role of fiscal in crisis. The research aims to review previous research, mainly literature on a fiscal policy designed during an economic recession or crisis. Lessons from the past crisis and the extent to which fiscal policy has roles in overcoming crisis are evaluated through literature. By investigating and analyzing 29 academic works of literature, this research finds that fiscal stimulus and austerity measures are two government options in a crisis. When the fiscal stimulus is launched, the deficit becomes the following consequence, usually funded by debt. This research also shows a plethora of studies on the fiscal role in developed countries such as Europe, but only a meager of research conducted in Asia, particularly South-Eastern Asia. The finding encourages research on the extension of fiscal role themes in crisis and mixed-method employment to render new insights into the subject matter.

Food Price Shocks and Household Consumption in Developing Countries: The Role of Fiscal Policy

This paper contributes to quantifying the severity of various types of shocks for one small open economy. The role of fiscal policy was evaluated along with monetary and exchange rate innovations and the findings reflect the relevance of domestic and external shocks. These estimates show that productivity shocks explain about 90% of real variables in the economy. Regarding external shocks, the presence of oil perturbance affects approximately one-third of the fiscal balance behavior. Finally, the main instrument of economic policy is related to public investment innovations that cause more than the 50% of the real variables, especially as an instrument for economic crisis.

The aim of the article is to explore the size and the structure of fiscal packages, implemented in response to the crisis caused by COVID-19, from the point of view of their impact on the security and stability of public finance. The first section provides an overview of the economic theory on the role of fiscal policy, including the causes of fiscal intervention. Next, difficulties in conducting fiscal policy under the conditions of pandemic are presented. In addition, fiscal instruments and their size are analysed in the context of their influence on budget results. In conclusion, it is claimed that fiscal packages should be temporary and targeted in order not to create a permanent burden on public finance, ensuring budget neutrality in the medium term. The empirical analysis expands the current knowledge on potential effects of fiscal policy implemented under the crisis conditions and low interest rates, when macroeconomic stabilisation can only be ensured through fiscal policy instruments, despite the accompanying fiscal costs related to the increase in public debt.