Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/312954 
Year of Publication: 
2024
Citation: 
[Journal:] Contemporary Economics [ISSN:] 2300-8814 [Volume:] 18 [Issue:] 3 [Year:] 2024 [Pages:] 280-300
Publisher: 
University of Economics and Human Sciences in Warsaw, Warsaw
Abstract: 
We present an open economy growth model incorporating various elements of fiscal policy, including government expenditure on education and public capital (infrastructure), budget deficit, internal and external public debt, public consumption, and four tax rates. This detailed description of fiscal policy allows for a systematic study of the relationship between fiscal policy and economic growth. We derive the balanced growth path and analyze its properties, including existence, uniqueness, and stability. The theoretical results are supported by numerical simulations for Poland, with the model calibrated based on data from the years 2010 to 2019. In the baseline scenario, the GDP growth rate converges to 3.98%. However, through appropriate adjustments to fiscal policy, economic growth can be significantly accelerated. Notably, increasing spending on both education and public infrastructure proves to be the most effective way to permanently boost economic growth, even if it requires raising taxes on consumption or increasing public debt.
Subjects: 
economic growth
human capital
public capital
public debt
infrastructure
JEL: 
E62
F43
H52
H6
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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