Fiscal policy in association with sustainable economic growth in the period 2011-2020

Abstract

Employing endogenous growth model, panel data from 62 provinces and cities in 2000-2011 and PMG and Arellano-Bond difference GMM, the research analyzes empirically the relationship between the fiscal policy and economic growth in Vietnam. Its main findings are: (i) fiscal decentralization and economic growth cointegrate in the long run, but government’s efforts to adjust its fiscal policy during economic shocks that cause disequilibrium or make the economy deviate from its long-term trend produce very low effects; (ii) fiscal income decentralization and fiscal support have positive effects on economic growth while expenditure decentralization does not; (iii) current expenditure and spending on education, scientific research, health care and environmental issues produce positive effects on the economic growth while public investment fails to do so.