Long Run Growth Effects of Fiscal Policy - a Case Study of Hungary
Keywords:
Economic growth, Fiscal policy, Long run growth, HungaryAbstract
One of the most debated questions of economics is whether the pace of long run economic growth can be influenced by economic
policies. The (long run) steady state growth rate of the economy is determined by two exogenous factors according to neoclassical
theory. But Endogenous growth theories support the view that (among other factors) fiscal policy can affect economic growth
through several channels, some of which can give positive, while others negative impulses to the rate of growth. The paper deals with
the long run growth effects of fiscal policy in Hungary, emphasising that restrictive fiscal policy actions can still have a beneficial
effect on the long run growth rate of the economy, founding such growth-oriented actions in the future, which could not have been
taken without the earlier stabilisation. An outstanding growth-fastening effect is the lesson we can learn from comparing the fiscal
data of the 1994-1996 period with the 2003-2005 data.
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