Private investment is the principal transmission channel through which fiscal policy affects growth in high-income countries. In low-income countries, governance and also other considerations suggest that the primary channel is factor productivity. Empirical results reported in this paper...

This paper examines the impact of labour and product market reforms on economic growth in 25 OECD countries between 1985 and 2013, and tests whether this impact is conditioned by the fiscal policy stance, i.e. whether there are fiscal expansions or adjustments. Our local projection results...

We use a simple endogenous growth model with productive public capital to investigate the degree to which observed fiscal policies in eight OECD countries can account for slowdowns in the growth rates of aggregate labor productivity since 1970. In model simulations, we find that none of the...

To fulfill their tasks, governments rely on public expenditures and taxes. Both influence the incentives and shape the decisions and actions of private economic agents. As governments resort to both instruments simultaneously, their combined theoretical impact on economic performance is a priori...

The hesitation of many conventional-wisdom economists to rely more aggressively on fiscal policy measures in order to keep their public finances more or less balanced may have contributed to the persisting current slowdown. We discuss the potential of active fiscal policies in stimulating growth...

We provide a comprehensive survey of the recent literature on the link between productive government expenditure and economic growth. Starting with the seminal paper of Robert Barro (1990) we show that an understanding of the core results of the ensuing contributions can be gained from the study...

This paper explores the role of public debt and fiscal deficits on factor productivity in an economy with credit market frictions and heterogeneous firms. When credit market conditions are sufficiently weak, low interest rates permit the government to run Ponzi schemes so that permanent primary...

This paper explores the role of public debt and fiscal deficits on factor productivity in an economy with credit market frictions and heterogeneous firms. When credit market conditions are sufficiently weak, low interest rates permit the government to run Ponzi schemes so that permanent primary...

In light of the uncertainty of the effects of population ageing on growth and fiscal variables, it is sensible to ask whether Italy's public finances can achieve sustainability under the spending pressure exerted by future demographic and macroeconomic developments. The paper addresses this...

We explore the impact of major labor and product market reforms on current account dynamics using a new “narrative” database of major changes in employment protection for regular workers and product market regulation for non-manufacturing industries covering 26 advanced economies over the...