Degree Name

Master of Arts (MA)

Semester of Degree Completion

2018

Thesis Director

Mukti P. Upadhyay

Abstract

There is a constant debate about the effectiveness of fiscal policy on economic growth of developing countries. Policy makers in developing countries generally attempt to address socioeconomic issues such as poverty, unemployment, hunger, poor investment, and illiteracy while adjusting the levels of public spending and determining tax rates. This thesis examines the impact of fiscal policy on economic growth in four countries of South Asia. For reasons of data availability I choose four of these countries – Bangladesh, India, Pakistan, and Sri Lanka – for the period 1980 to 2016. I use the Error Correction Model (ECM) and Autoregressive Distributed Lag (ARDL) model on pooled cross-section time-series data, and on panel data that can be handled by employing fixed-effects and random-effects estimators. Empirical results show that both government expenditure and tax revenue have no significant impact on real GDP growth in those South Asian countries. Moreover, real investment is strongly positively correlated with real GDP growth in these countries.

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