Acta academica karviniensia 2015, 15(2):95-107 | DOI: 10.25142/aak.2015.021

THE IMPACT OF FISCAL POLICY ON ECONOMIC GROWTH DEPENDING ON INSTITUTIONAL CONDITIONS

Rudolf Macek1, Jan Janků2
1 V©B - Technical University of Ostrava, Economic Faculty, Sokolská 33, 701 21 Ostrava, Email:rudolf.macek@vsb.cz
2 V©B - Technical University of Ostrava, Economic Faculty, Sokolská 33, 701 21 Ostrava, Email:jan.janku@vsb.cz

This paper examines the impact of fiscal policy on economic growth depending on the institutional conditions in the OECD countries over the time period 2000-2012. The analysis is based on the methods and tests of panel regression. From the analysis results it is evident that in the case of government spending there is (1) positive impact on economic growth in the countries with lower fiscal transparency; (2) negative impact in countries with higher fiscal transparency. In less developed countries there is higher proportion of pro-growth spending within total government spending. On the other hand in more developed countries the Wagner law becomes valid with the existence of welfare costs. In the case of taxation impact on economic growth it is visible that (3) the negative impact of taxation is more harmful for economic growth in the countries with worse institutional conditions. The explanation of this result can be linked to different fiscal transparency and different economic level.

Keywords: economic growth, fiscal policy, government spending, institutional factors, OECD, taxation
JEL classification: E62, H20, O17, O40

Received: May 6, 2015; Accepted: September 23, 2015; Published: June 30, 2015  Show citation

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Macek R, Janků J. THE IMPACT OF FISCAL POLICY ON ECONOMIC GROWTH DEPENDING ON INSTITUTIONAL CONDITIONS. Acta academica karviniensia. 2015;15(2):95-107. doi: 10.25142/aak.2015.021.
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