Fiscal Policy and Economic Growth
Empirical Evidence from Ethiopia
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Low and erratic historical per capita income added with government resource constraints put their shade on the efforts of sustaining economic growth in Ethiopia. In such circumstance prioritizing government expenditures on the basis of economic benefit and raising funds from sustainable sources are the major economic policy challenges. But little is known about how the composition of government expenditure and revenue affects Ethiopia's economic performance. It has become critically important to know which component should be adjusted and why. Knowing the relative contribution of each budget c...
Low and erratic historical per capita income added with government resource constraints put their shade on the efforts of sustaining economic growth in Ethiopia. In such circumstance prioritizing government expenditures on the basis of economic benefit and raising funds from sustainable sources are the major economic policy challenges. But little is known about how the composition of government expenditure and revenue affects Ethiopia's economic performance. It has become critically important to know which component should be adjusted and why. Knowing the relative contribution of each budget component to economic growth is crucial for decision making. This book, therefore, examine the effect of fiscal policy variables on economic growth in Ethiopia using annual data. To achieve the stated objective Barro type growth model is estimated with the aid of Co-integrated Vector Autoregressive (VAR) and error correction modelling techniques. This analysis would pave the way for further researches and give an insight for experts and policy makers to influence the pace of economic growth and development through fiscal policy tools.
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