Economic Growth and Budget Constraints: EU Countries Panel Data Analysis

What is it about?

This article examined changes in fiscal composition (taxes and government expenditures) in a panel of 20 EU member states. The main aim was to find how these changes can affect economic growth in these countries. The adverse effect was identified for an increase of social security contributions, property, production and personal income tax quotas.

Featured Image

Why is it important?

Fiscal composition approach is important because in order to achieve budget balance, simple expenditure cuts or increase in taxes have different effect on economic growth. It is important to see what kind of taxes (or expenditures) have the most distortionary (productive) effects.