The impact of fiscal policy on economic growth in Namibia

The purpose of this study was to shed light on the impact of fiscal policy on growth. Governments undertake expenditures to pursue a variety of goals, only one of which may be an increase in per capita income. Using the framework of endogenous growth models which seeks to explain sustained long term growth, we showed how a change in the mix of public spending in favour of productive activities could lead to a steady state growth rate. The explanatory variables, which affect growth positively, include capital expenditure, tax revenue and the terms of trade. The share of private consumption in GDP, fiscal deficit, the share of total public debt in GDP and current expenditure relate negatively to the growth rate of output.