This paper evaluates the effects of fiscal policy on investment using a panel of OECD countries. In particular, we … investigate how different types of fiscal policy affect profits and, as a result, investment. We find a sizeable negative effect … of public spending - and in particular of its public wage component - on business investment. This result is consistent …

product market, concerning in particular entry barriers, are negatively related to investment. The policy implication of our … analysis is clear: regulatory reforms, especially those that liberalize entry, are very likely to spur investment. …