Fiscal policy and economic growth

William Easterly, Sergio Rebelo

    Research output: Contribution to journalArticlepeer-review


    This paper describes the empirical regularities relating fiscal policy variables, the level of development, and the rate of growth. We employ historical data, recent cross-section data and newly constructed public investment series. Our main findings are: (i) there is a strong association between the development level and the fiscal structure: poor countries rely heavily on international trade taxes, while income taxes are only important in developed economies; (ii) fiscal policy is influenced by the scale of the economy, measured by its population; (iii) investment in transport and communication is consistently correlated with growth; (iv) the effects of taxation are difficult to isolate empirically.

    Original languageEnglish (US)
    Pages (from-to)417-458
    Number of pages42
    JournalJournal of Monetary Economics
    Issue number3
    StatePublished - Dec 1993


    • Development
    • Fiscal policy
    • Growth

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics


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