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We present an open economy growth model incorporating various elements of fiscal policy, including government expenditure on education and public capital (infrastructure), budget deficit, internal and external public debt, public consumption, and four tax rates. This detailed description of fiscal policy allows for a systematic study of the relationship between fiscal policy and economic growth. We derive the balanced growth path and analyze its properties, including existence, uniqueness, and stability. The theoretical results are supported by numerical simulations for Poland, with the model calibrated based on data from the years 2010 to 2019. In the baseline scenario, the GDP growth rate converges to 3.98%. However, through appropriate adjustments to fiscal policy, economic growth can be significantly accelerated. Notably, increasing spending on both education and public infrastructure proves to be the most effective way to permanently boost economic growth, even if it requires raising taxes on consumption or increasing public debt. [ABSTRACT FROM AUTHOR]

This paper investigates the linkages between economic growth and fiscal policy under perfect capital mobility. The model incorporates wide range of fiscal policy instruments: the budget deficit, the structure of public debt, public expenditures on education, public consumption, and four tax rates. We prove that two tax rates - on consumption and interest on government bonds held by domestic lenders - are neutral for economic growth: both for the balanced growth path (BGP), and for transitory dynamics. All other parameters of fiscal policy are not neutral. Theoretical results are illustrated with an empirical analysis for Poland based on post-global financial crisis data for the Polish economy (2009-2018). Numerical simulations show that if fiscal policy remains unchanged, Polish economy will converge to the BGP with GDP growing at 2.3%. The best way to accelerate growth is to increase public investment in education. The other budgetary policy instruments are less effective in shaping economic growth. [ABSTRACT FROM AUTHOR]

In this paper we develop an open-economy endogenous growth model to examine the influence of fiscal policy on the economy in the long run. We allow for public deficit and 5 types of taxes. One of the novel features is separate treatment of interest rates on public and private debt, both of which are linear functions of appropriate debt-to-GDP ratios. Two extreme situations are analyzed: a model of "decentralized economy", where economic agents do not take into account any externalities, and a model of "benevolent social planner". We derive the rules of optimal fiscal policy that induce economic agents to internalize all externalities. Theoretical results are illustrated with an empirical analysis for Poland. The optimal values of several fiscal policy instruments for Poland are calculated. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between economic growth in Poland and selected elements of fiscal policy and private spending on education. We use the Mankiw-Romer-Weil model, augmented with learning-by-doing and spillover-effects and with concepts from the literature on optimal fiscal policy. We demonstrate that, from 2000-2015, economic growth in Poland was primarily driven by rapid improvements in the level of human capital (at 4.4% per annum) coupled with a rapid increase in public capital (6.0%) and secondarily due to the accumulation of private capital (2.1% annually). Simulations of tax cuts suggest that a synchronized reduction of all tax rates by 5 percentage points (pp) in Poland should increase the annual GDP growth rate by approximately 0.32 pp. Increasing (private or public) spending on education by 1 pp of the GDP would increase the growth rate by approximately 0.3 pp. We also analyze the effects of increasing public capital. The stock of public capital in Poland is still below the optimal level, and it may be beneficial to increase investment in public capital at the cost of public consumption (which is intuitively clear) and -- to some extent --- at the cost of public spending on education. [ABSTRACT FROM AUTHOR]

In this paper we develop an open-economy endogenous growth model to examine the influence of fiscal policy on the economy in the long run. We allow for public deficit and 5 types of taxes. One of the novel features is separate treatment of interest rates on public and private debt, both of which are linear functions of appropriate debt-to-GDP ratios. Two extreme situations are analyzed: a model of "decentralized economy", where economic agents do not take into account any externalities, and a model of "benevolent social planner". We derive the rules of optimal fiscal policy that induce economic agents to internalize all externalities. Theoretical results are illustrated with an empirical analysis for Poland. The optimal values of several fiscal policy instruments for Poland are calculated. [ABSTRACT FROM AUTHOR]