Fiscal Policy and Growth in Developing Asia

24 Pages Posted: 29 Oct 2014

See all articles by Arnelyn Abdon

Arnelyn Abdon

Asian Development Bank

Gemma Bolotaulo Estrada

Asian Development Bank - Economic Research

Minsoo Lee

Asian Development Bank

Donghyun Park

Asian Development Bank - Economic Research

Date Written: October 2014

Abstract

In this paper we empirically explore the relationship between fiscal policy and economic growth in developing Asia. The region’s overall level of taxes and government spending are substantially lower than those prevailing in advanced economies. Nevertheless, there are conceptual grounds why fiscal policy, including the composition of taxes and government spending, can have a significant effect on growth, as our empirical analysis shows. In line with economic theory, property taxes have a more benign impact on growth than direct taxes, and spending more on education has a sizable positive impact on growth.

Keywords: fiscal policy, growth, taxation, government spending, Asia

JEL Classification: H20, H50

Suggested Citation

Abdon, Arnelyn May and Estrada, Gemma Bolotaulo and Lee, Minsoo and Park, Donghyun, Fiscal Policy and Growth in Developing Asia (October 2014). Asian Development Bank Economics Working Paper Series No. 412, Available at SSRN: https://ssrn.com/abstract=2515779 or http://dx.doi.org/10.2139/ssrn.2515779

Arnelyn May Abdon (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Gemma Bolotaulo Estrada

Asian Development Bank - Economic Research ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Minsoo Lee

Asian Development Bank ( email )

6 ADB Avenue
Mandaluyong City
Metro Manila, 1550
Philippines
63-2-683-1622 (Phone)
63-2-636-2342 (Fax)

HOME PAGE: http://www.adb.org

Donghyun Park

Asian Development Bank - Economic Research ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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