Effects of Fiscal Policy on Growth

By

ACKNOWLEDGEMENT

My thanks go out to all who have helped me complete this study and with whom this project may have not been possible. In particular, my gratitude goes out to friends, facilitator and family for extensive and helpful comments on early drafts. I am also deeply indebted to the authors who have shared my interest and preceded me. Their works provided me with a host of information to learn from and build upon, also served as examples to emulate.

DECLARATION

I, (Your name), would like to declare that all contents included in this thesis/dissertation stand for my individual work without any aid, and this thesis/dissertation has not been submitted for any examination at academic as well as professional level previously. It is also representing my very own views and not essentially which are associated with university.

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ABSTRACT

This dissertation is an attempt to study the effects that fiscal policy has on the economic growth of the 22 OECD countries. Fiscal policy is the central theme of macroeconomics for the long run of the growth process. There were a number of researchers who examine different aspects of fiscal policy as an engine of profit maximization and economic growth. Fiscal policy is the central theme of macroeconomics for the long run of the growth process. There were a number of researchers who examine different aspects of fiscal policy as an engine of profit maximization and economic growth. The main theme of this research study is to contribute to the impact of fiscal policy on growth. The channels through which fiscal policy affects economic growth are very different. This research study has adopted a secondary quantitative method of research in order to meet the aim of the study. The data has been collected for the period 1995 to 2010 for the 22 OECD countries from the World Bank and IMF. The results of hypothesis testing showed that there is a significant impact of inflation, revenues, expenditures, and unemployment on the Gross Domestic Product (GDP). The results of the regression analysis have shown that there is a significant impact of the independent variable on the Gross Domestic Product.

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 01: INTRODUCTION1

1.1 Background of the Study1

1.2 Problem Statement2

1.3 Purpose of the Study2

1.4 Research Hypothesis3

1.5 Significance of the Study3

1.6 Disposition of Dissertation4

CHAPTER 02: LITERATURE REVIEW5

2.1 Introduction5

2.2 Fiscal Policy5

2.3 Empirical Evidence6

2.4 Factors that Affect Fiscal Policy and Growth9

2.5 Survey of Non-Fiscal Variable Elasticities of Fiscal Variables12

CHAPTER 03: RESEARCH METHODOLOGY15

3.1 Introduction15

3.2 Research Method15

3.3 Overview of Secondary Method15

3.4 Regression Analysis17

3.5 Variables for the Study17

3.6 Data17

3.7 Reliability18

3.8 Validity18

3.9 Conclusion19

CHAPTER 04: RESULTS AND ANALYSIS20

4.1 Introduction20

4.2 Regression and Correlation Analysis20

4.3 Hypothesis Testing23

4.4 Discussion25

CHAPTER 05: CONCLUSION28

5.1 Recommendations for Future Research30

REFERENCES31

CHAPTER 01: INTRODUCTION

1.1 Background of the Study

In aggregate terms the worldwide growth of foreign direct investment (FDI) is important and has phenomenal within the last two decades. In order to maximize the market share in the international market the industries are trying to grow faster than trade flows. Global sales of foreign affiliates estimated the value of international production at ...