Abstract: The relationship between public expenditure, taxes and economic development has been extensively analyzed in literature with no consensus. This study adds to the literature as it divides public expenditure and taxes into different components to see their individual impact on economic development in case of Greece. Two types of regression models were estimated; in the first regression total public expenditure and taxes were used as fiscal tools while in the second model public expenditure and taxes were divided into different categories. The results show that taxes have negative effect while public expenditures have insignificant effect on development when considered in totality. However, current expenditures stimulate growth while capital expenditure has insignificant effect on growth. Indirect taxes impede development while direct taxes have insignificant effect. This suggests that development expenditures are not sufficient to put a significant impact on economic growth. Hence, there is dire need to increase developmental expenditures in Greece. Furthermore direct taxes should be focused more to increase revenue instead of indirect taxes.
Keywords: Public Expenditure, Taxation, Fiscal Sustainability, Economic Growth.
Jel codes: H50, H21, H50, H71, H72
Title: A Theoretical and Empirical Analysis of Public Expenditure and Taxation into Greek Economy
Author: Dr. Stamatis Kontsas
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
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