Assessing the Impact of Fiscal Policy on Economic Growth: Strategies for Sustainable Development

Introduction

Fiscal policy, encompassing government spending and taxation decisions, plays a crucial role in shaping economic growth. Its significance has been underscored in contemporary economic discourse, especially in the context of sustainable development. This paper aims to assess the impact of fiscal policy on economic growth, exploring various strategies that can promote sustainable development. By examining both theoretical frameworks and empirical evidence, the subsequent sections will elucidate how effective fiscal policy can stimulate economic activity, reduce inequality, and foster a sustainable future.

The Role of Fiscal Policy in Economic Growth

At its core, fiscal policy influences economic growth through two main channels: aggregate demand and supply-side effects. When governments increase spending, they directly boost aggregate demand, leading to heightened consumption and investment. For instance, during economic downturns, expansionary fiscal policies, such as increased public spending on infrastructure, have been shown to stimulate growth by creating jobs and enhancing productivity. The