Fiscal Policy from a Structural Economic Dynamics Approach with General Macroeconomica Constraint

The aim of this paper is to analyze how fiscal policy can affect per capita economic growth. Therefore, an extension of the model by Araujo and Lima (2007) was made, by considering the public sector taxation and public expenses. Our findings corroborate the fact that positive public savings relieve the external constraint. We demonstrate that sectoral public spending growth rate and sectoral public taxes growth rate can affects economic growth. Still, it shows that the rate of economic growth is sensitive to the sectoral composition of public spending and taxation. Finally, a computer simulation is presented.