Macroeconomic Fiscal Policy

1435 Words6 Pages

CHAPTER ONE
1. INTRODUCTION
1.1 Background of the Study
Governments make use of different macroeconomic policy instruments such as fiscal and monetary policies to stabilize the macro-economy and brig about growth to their respective countries. The efficiency of these instruments is still a source of ongoing arguments. The extremity in the debate is to the level that some economists arguing ineffectiveness of fiscal and monetary policies in all countries. There is another group who regard them as important policy tools, while they agree that their effectiveness might depend on different conditions in the economy.
Fiscal policy is one of the commonly used tools in order to achieve goals of growth and stability in a country’s economy through …show more content…

Though there are long routed conflicting of thoughts on the issue, there isn’t empirical evidence which is conclusive for either of the thoughts. Government expenditure is one of the important determinants of economic growth. However, the growth of an economy depends on the size and capacity of capacity, and how effectively the capital expenditure was utilized in the development process (Sharma 2012).
There have been a number of studies that attempt to measure the impact of components of government expenditure on economic growth. These studies have continued to generate a series of debate among scholars. Some scholars argued that increase in government expenditure on socioeconomic and physical infrastructure boosts economic growth. However, there is another group who do not agree that an increasing government expenditure encourages economic growth, instead they assert that higher public expenditure may slow down overall performance of the economy by crowding out private …show more content…

The first chapter of the thesis is an introduction. This section talks about background of the study and the problem statement. It farther presents general and specific objectives of the study and scope of the study. In the second chapter, related literatures carried out by different researchers on the same issue are summarized. The next chapter discusses the overview of government expenditure and economic growth and Ethiopian trends. In the fourth chapter, data and methodology used in the study are discussed in detail. The data type and sources, estimation technique in the regression analysis and the different sets of tests to test the data and result are described. In chapter five, the results are presented in form of different tables and graphs and discussions are made on the results. In chapter six, which is the last section of the paper, conclusions are made and recommendations are

Open Document