The study aimed at establishing the long-term influence of fiscal policy on investments in fixed assets. A cross-sectional sample of data covering 27 countries during 1960 - 2003 was used. It was found that an increase in deficit equal to 1 % of GDP decreases investments by 0.3 % of GDP, while 1 % increase in revenue of public finance sector corresponds to a decrease in investments equal to 0.2 % of GDP. The study results suggest that both, expansive fiscal policy, as well as the increase of the share of public sector in the economy, correspond, as a rule, to a reduction in long-term asset accumulation, which in turn, might negatively affect economic growth in longer perspective.
Financed by the National Centre for Research and Development under grant No. SP/I/1/77065/10 by the strategic scientific research and experimental development program:
SYNAT - “Interdisciplinary System for Interactive Scientific and Scientific-Technical Information”.