Discussions on the Growth Efficiency of Expansionary Fiscal Policy via Monetary Policy in Shrinking Periods: Wide Range of Country Analysis

Abstract

There are many different opinions in the literature that expansionary fiscal policies can be effective on growth during periods of economic contraction. In this study, different approaches to expansionary fiscal policies are examined in terms of the effects and tradeoffs between fiscal expenditures-growth, expansionary tax policies-growth and inflation-growth. The short-term and long-term effects of fiscal policies on growth in 110 countries for the period of 2007-2016 were analyzed, taking into account the expansionary policies of the 2007-2009 period, the effect of the main growth dynamics and the interaction of monetary-fiscal policies. The results show the holistic view and effectiveness.