The Impact of Government Policies on Domestic Product Growth in Developed Economies

EasyChair Preprint 13823

Abstract

This study examines the relationship between government policies and domestic product growth in developed economies. Using panel data from 20 OECD countries from 2010 to 2022, we analyze the effects of fiscal, monetary, and regulatory policies on gross domestic product (GDP) growth.

The results indicate that expansionary fiscal policies, such as increased government spending and tax cuts, have a positive and significant impact on GDP growth in the short-term. However, prolonged fiscal deficits can lead to slower growth in the long-run due to rising debt levels and crowding out of private investment.

Likewise, accommodative monetary policies, including lowered interest rates and quantitative easing, provide a boost to economic activity in the near-term. But overly loose monetary conditions can also contribute to asset bubbles and inflationary pressures, which can subsequently undermine growth.

In terms of regulations, our findings suggest that a balanced approach is optimal. Overly burdensome regulations hinder business dynamism and productivity growth, but a certain degree of sensible regulation is necessary to ensure financial stability and protect consumer/worker welfare.

The study concludes that policymakers must carefully weigh the tradeoffs and implement a judicious mix of fiscal, monetary, and regulatory measures to foster sustainable domestic product growth in developed economies. Short-term stimulative policies need to be complemented by structural reforms to boost long-run competitiveness and resilience.

Keyphrases: Economics, Government, digital, growth, product

@booklet{EasyChair:13823,
  author    = {Favour Olaoye and Kaledio Potter and Lucas Doris},
  title     = {The Impact of Government Policies on Domestic Product Growth in Developed Economies},
  howpublished = {EasyChair Preprint 13823},
  year      = {EasyChair, 2024}}