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EFFECTIVENESS OF FISCAL POLICY IN ECONOMIC GROWTH: THE CASE OF ZIMBABWE.

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Author(s): Munongo Simon

Journal: International Journal of Economics and Research
ISSN 2229-6158

Volume: 03;
Issue: 06;
Start page: 93;
Date: 2012;
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Keywords: Fiscal Policy and Cointergration

ABSTRACT
The study investigates the effectiveness of fiscal policy in spurring economic growth in Zimbabwe. Annual data covering 1980-2010 were utilized. Unit roots of the series were examined using the Augmented Dickey-Fuller technique after which the cointegration test was conducted using the Johansen Approach. Error-correction models were estimated to take care of short-run dynamics. The results indicate that government consumption expenditureand income tax positively impacted on economic growth during the period of coverage but capital expenditure by government has a negative effect and a long-run relationship exists between them as confirmed by the cointegration test.
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