Fiscal Policy and Economic Growth: The Impact of Government Spending and Taxation Policies

Abstract

Fiscal policy, encompassing government spending and taxation policies, plays a crucial role in shaping economic growth and development. the impact of fiscal policy on economic growth, exploring the mechanisms through which government spending and taxation policies influence macroeconomic outcomes. empirical evidence and theoretical frameworks, the paper seeks to elucidate the complex relationship between fiscal policy and economic growth, highlighting key factors and considerations for policymakers. Government spending, comprising expenditures on infrastructure, education, healthcare, defense, and social programs, can stimulate economic growth through various channels. Investment in infrastructure, for example, enhances productivity, fosters innovation, and improves the efficiency of resource allocation, thereby boosting long-term economic growth. Similarly, government spending on education and human capital development can enhance the skills and productivity of the workforce, leading to higher levels of economic output and competitiveness. Additionally, targeted social programs can reduce inequality, alleviate poverty, and promote social cohesion, thereby contributing to sustainable and inclusive growth.