Fiscal policy and economic growth: The case of the Italian regions

Abstract

This paper seeks to contribute to our understanding of the relationship between economic policy and economic growth. With the use of a standard growth model, it assesses the influence of public investment and public transfers on the rate of economic growth. It does this by using data from the 20 Italian regions between 1970 and 1995. While the results show a positive influence of public investments on economic growth, this was not the case for public transfer payments in Italy.