Effects of Fiscal Policy on Growth

This study aims to highlight that taxes - especially distortionary taxes - have a negative impact on the GDP growth prospects of a country. Pertaining to fiscal financing, government spending on human capital-enhancing sectors such as education, health or social protection have a weak impact on GDP growth whilst government spending on physical capital-enhancing sectors such as construction and transport & communication. This hypothesis is backed by data from 60 countries over the period 1980-2011, with references from transcendent academia. Further research over an even larger sample size is encouraged for a more consolidated and updated analysis.