The Link between Fiscal policy and Economic Growth Literature review

The Link amongst Fiscal policy and Economic Growth - Literature review spokespersonThis called for strategic approaches towards influencing the economy positively. As a result, umpteen an(prenominal) approaches have been used to influence the nations economy in different ways, for instance, the use monetary policy, macrostinting policy and pecuniary policy, which ar applicable in many countries. In some instances, some economic goals are met through a combination of several policies, depending on the nature of the goals to be met. Generally, fiscal policy is the process of influencing macroeconomic conditions through policies of administration expenditure. The practice involves influencing a nations economy through the collection of revenue, borrowing and using governments expenditure. In this case, the government engages in adjusting the levels of its spending in a bid to track and influence the economy of the nation. The policies of government spending often affect the inte rest and tax rates alongside the governments spending (Barro and Redlick, 2011, 57). Just like other policies of influencing a nations economy, fiscal policy is applicable direct the economic goals of the country. The main goal is always the stability of the countrys economy through the cut back of spending and interest rates. The Concept of Fiscal PolicyJohn M. Keynes, a British economist, came up with theories that are currently applicable in fiscal policy. His theories state that governments and nations, through the increase or decrease of humanity spending and the level of taxes, jackpot influence the levels of macroeconomic productivity (Barro and Jin, 2011, 1568). The theory suggests further that such influences can further maintain the value of the currency at levels that are healthy, increase employment and curb inflation. The stoppage of focus in the modern economics is the produce theory. This theory addresses the implications of economic growth regarding to wealth ( Brzezinski and Dzielinski, 2009, 244) anyway addressing the factors triggering economic growth. The system of economics can be stimulated through learning-by-doing mechanisms, which are essential for self-sustainable economic growth. These mechanisms can be induced into the economy by the government acts. Similarly, endogenous growth theory relates to fiscal policy, given that the outcome of the process involves the issue of losers and winners. With regard to neoclassical growth models formulated by cast off and Solow (Solow, 1956, 67), the exogenous rate of progress in technology is the backbone of growth income per capita, in its steady state. all policy is characterised by the need of growth, even though the economys steady level of proceeding will be affected by the policy. In this case, the rate of economic growth will wholly be influenced by the economic policy when the economy is being transited to a steady state. Endogenous growth theorys distinguishing characteristic t hat is crucial in fiscal policy is the visualisation of the nature of intimacy (Tcherneva, 2010, 27). This standard framework of making fiscal policy has been deduced from this model, with regard to taxation and government spending. Thus, this explains why many researches focus on the roles of governments in influencing the economy through dividing and stabilising the cake as opposed to enlarging the economy. Primarily, the reflect of the link between fiscal policy and economic growth has had the focus on the relationship between taxation and gove