Fiscal Policy and Economic Development

35 Pages Posted: 1 Jul 2008

See all articles by Peter Rangazas

Peter Rangazas

Indiana University Purdue University Indianapolis (IUPUI) - Department of Economics

Alexandros Mourmouras

International Monetary Fund (IMF) - Policy Development and Review Department

Date Written: June 2008

Abstract

This paper offers possible explanations for three generally observed facts about fiscal policy and development: (F1) The relative size of government increases as an economy develops, (F2) The rise in government and taxation are associated with rising or constant economic growth rates, and (F3) Today's developing countries have larger government sectors than did today's developed countries at similar stages of development. The explanations for these facts are based on the structural transformation from traditional (mostly agricultural) to modern (industrial and post-industrial) production, rising public infrastructure investment, and less representative governments in many of today's developing economies.

Keywords: Working Paper, Fiscal policy, Development, Developed countries, Developing countries, Government finance statistics, Taxation

Suggested Citation

Rangazas, Peter Coia and Mourmouras, Alexandros, Fiscal Policy and Economic Development (June 2008). IMF Working Paper No. 08/155, Available at SSRN: https://ssrn.com/abstract=1153753

Peter Coia Rangazas (Contact Author)

Indiana University Purdue University Indianapolis (IUPUI) - Department of Economics ( email )

425 University Boulevard
Indianapolis, IN 46202-5140
Germany
(317) 529-2837 (Phone)

Alexandros Mourmouras

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Room 5-311
Washington, DC 20431
United States
202-623-5402 (Phone)
202-589-5402 (Fax)

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