The Fiscal Policy as Growth Engine in EU countries

AbstractWorldwide public authorities have replied to the financial and economic crisis of the last years through fiscal policy measures which have mainly targeted short term objectives. Unfortunately, on the long term, the impact of these measures hasn’t always been a favorable one due to its collateral effects. Although the upward trend of the economy has been re-established as a result of increasing public expenditures, the public debt accumulated in this way has been difficult to manage. This paper aims to identify the main determinants of economic growth in the EU countries and to highlight several reforms in terms of public policies. The results point out the fact that a rather small dimensioned public sector positively influences economic growth, just like productive investments do, as opposed to non-productive investments. The differential taxation of tax base categories, as well as a cautionary increase of public debt or even public debt reduction, has to be considered in order to get a sustainable fiscal policy