The Impact of Fiscal Policy on Economic Growth

At the latest since J. M. Keynes, the analysis of the impact of fiscal policy on economic growth is among the areas of economic research that receive most attention. Since then the analysis of fiscal policy has changed fundamentally, not only with regard to methodological improvements but also with regard to the areas considered to be important.
Using the example of the large European State and prominent transition country Ukraine, selected modern aspects of fiscal policy are analysed: First, can a higher degree of fiscal decentralization in the sense of more freedom for decisions given to lower levels of government promote economic growth? And if so under what conditions? Second, which of the potential causes of shadow economic activity are statistically significant and which of them can be influenced by economic and fiscal policy measures, and what is their respective quantitative influence on the shadow economy? Third, is the fiscal equalization system effectively redistributing income among the regions? What is the impact of the redistribution on economic growth and on the donor and recipient regions, respectively? How is fiscal sustainability to be assessed and could relatively simple rules be suggested that would promote a stabilizing influence of fiscal policy on the economy while avoiding crises and improve the long run efficiency of fiscal policy? Fifth, to what extent is social policy fiscal policy and are there options to raise the efficient use of resources in social policy?
Each of these questions is answered on the basis of an analysis and with policy recommendations.