We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

The Link between Fiscal policy and Economic Growth - Literature review Example

Comments (0) Cite this document
Summary
Prior to the United States’ great depression, economy was approached by the laissez faire approach. However, after World War II, the government had the need to act proactively, towards regulating the rates of inflation, the value of the currency, business cycles and unemployment rates…
Download full paper
GRAB THE BEST PAPER
The Link between Fiscal policy and Economic Growth
Read TextPreview

Extract of sample
The Link between Fiscal policy and Economic Growth

Download file to see previous pages... This called for strategic approaches towards influencing the economy positively. As a result, many approaches have been used to influence the nations’ economy in different ways, for instance, the use monetary policy, macroeconomic policy and fiscal policy, which are applicable in many countries. In some instances, some economic goals are met through a combination of several policies, depending on the nature of the goals to be met.
Generally, fiscal policy is the process of influencing macroeconomic conditions through policies of government spending. The practice involves influencing a nation’s economy through the collection of revenue, borrowing and using government’s expenditure. In this case, the government engages in adjusting the levels of its spending in a bid to track and influence the economy of the nation. The policies of government spending often affect the interest and tax rates alongside the government’s spending (Barro and Redlick, 2011, 57). Just like other policies of influencing a nation’s economy, fiscal policy is applicable directing the economic goals of the country. The main goal is always the stability of the country’s economy through the control of spending and interest rates.

The Concept of Fiscal Policy
John M. Keynes, a British economist, came up with theories that are currently applicable in fiscal policy. His theories state that governments and nations, through the increase or decrease of public spending and the level of taxes, can influence the levels of macroeconomic productivity (Barro and Jin, 2011, 1568). The theory suggests further that such influences can further maintain the value of the currency at levels that are healthy, increase employment and curb inflation. The point of focus in the modern economics is the growth theory. This theory addresses the implications of economic growth regarding to wealth (Brzezinski and Dzielinski, 2009, 244) besides addressing the factors triggering economic growth. The system of economics can be stimulated through learning-by-doing mechanisms, which are essential for self-sustainable economic growth. These mechanisms can be induced into the economy by the government acts. Similarly, endogenous growth theory relates to fiscal policy, given that the outcome of the process involves the issue of losers and winners. With regard to neoclassical growth models formulated by Swan and Solow (Solow, 1956, 67), the exogenous rate of progress in technology is the backbone of growth income per capita, in its steady state. Every policy is characterised by the need of growth, even though the economy’s steady level of operation will be affected by the policy. In this case, the rate of economic growth will only be influenced by the economic policy when the economy is being transited to a steady state. Endogenous growth theory’s distinguishing characteristic that is crucial in fiscal policy is the visualisation of the nature of knowledge (Tcherneva, 2010, 27). This standard framework of making fiscal policy has been deduced from this model, with regard to taxation and government spending. Thus, this explains why many researches focus on the roles of governments in influencing the economy through dividing and stabilising the cake as opposed to enlarging the economy. Primarily, the study of the link between fiscal policy and economic growth has had the focus on the relationship between taxation and gove ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The Link between Fiscal policy and Economic Growth Literature review”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1394564-the-link-between-fiscal-policy-and-economic-growth
(The Link Between Fiscal Policy and Economic Growth Literature Review)
https://studentshare.org/macro-microeconomics/1394564-the-link-between-fiscal-policy-and-economic-growth.
“The Link Between Fiscal Policy and Economic Growth Literature Review”, n.d. https://studentshare.org/macro-microeconomics/1394564-the-link-between-fiscal-policy-and-economic-growth.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
How has the UK retail sector adapted to recent changes in the economic climate effectively
The chapter would go on to shed some light on the impact of financial recession on UK’s retail sector and specifically the food segment. This section would also include highlighting the recent steps that the government has taken to rescue or support the retail sector from the recession.
23 Pages(5750 words)Literature review
The Link Between Employee Engagement and Organization Performance
The paper tells that organizations that adopt a strategy of social responsibility be inclined to fare enhanced in attracting novel recruits – a key concern for UK organizations in the present labour market. CIPD research has repeatedly verified the links among the method people are managed, organization performance and employee attitudes
12 Pages(3000 words)Literature review
Macroeconomic convergence, financial development and economic growth: CHINA
This dramatic post-1978 economic growth has been attributed to numerous global and internal factors. Among the many domestic factors there are new economic policies made by the government, high rates of savings among the common people and government induced opportunities for investments from international firms.
12 Pages(3000 words)Literature review
Link Between Physical Inactivity and Obesity Queried
The author reviews current literature about this topic, United Kingdom government health policies, and World Health Organization viewpoints on physical activity and the issue of obesity. He/ she also compared the standpoint and recommendations of the WHO on obesity and physical activity with current UK health policy.
10 Pages(2500 words)Literature review
Impact of import and export on the economic growth of Sweden
The other important trade partners of Sweden are France, Belgium and UK. Sweden also does require a large amount of imports to support its economy. The nation procures more than 17 percent of the needed imports from Germany.
12 Pages(3000 words)Literature review
Fiscal Policy and Economic Growth
The purpose of this assignment is to analyze macroeconomics basic concepts. This assignment is a review of an existing article titled EXCHANGE RATE REGIME TRANSITION DYNAMICS IN SOUTHEAST ASIA by Monzur Hossain. This paper has investigated the currency regime choices of six Southeast Asian Countries.
5 Pages(1250 words)Essay
Economic impact on Crime
These people are below the poverty levels. Some of them perish from starvation or from health maladies which are borne out of inadequate health care and limited nourishment. Other individuals seek different ways to improve their economic conditions, and many of these individuals have proven successful.
15 Pages(3750 words)Literature review
Regressing Japans economic growth
The economic growth may have had many effects and the monetary policy will be discussed in connection to this.
8 Pages(2000 words)Literature review
The study in economic factors affecting on the value of Stock Exchange of Thailand Index (SET index)
Arbitrage Pricing Theory is an alternative to Capital Asset Pricing Theory; the model has been used throughout time to determine returns of
16 Pages(4000 words)Literature review
Critical review of theories regrading the link between music and learning
This paper discusses these theories and evaluates the existing literature while comparing and contrasting different studies with existing theories. Learning theories are restricted to the ones that are identified as
12 Pages(3000 words)Literature review
Let us find you another Literature review on topic The Link between Fiscal policy and Economic Growth for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us