Impact of fiscal policy on economic growth in the euro area

Abstract

The main objective of this paper is to study the influence of fiscal policy on economic growth in euro area countries during the period of 2002- 2013. The implementation of fiscal policies by governments of different Member States needs to provide an impact on economic growth in the short- and long-run. Complex interactions between general government revenues and expenditures and economic growth are investigated by the means of regression analysis. The conclusion is that general government revenues based on non-distortionary taxes are more efficient in terms of supporting economic growth. The efficiency of government revenue policy and particularly the structure of taxes play a very important role in achieving economic development and fiscal consolidation.