The Impact of Fiscal Policies on Economic Growth: A Systematic Literature Review

Abstract

This study conducts a systematic literature review (SLR) to examine the multifaceted role of fiscal policy in promoting economic growth. Drawing on recent theoretical and empirical studies from last five-years, the paper synthesizes findings on the impact of government spending, taxation, and public debt on macroeconomic performance. The results highlight that productive public investment especially in infrastructure, education, and health significantly enhances long-term growth, particularly when supported by strong institutions and transparent governance. Tax policy effects are shown to vary with the structure and administration of tax systems, where growth-friendly and equitable designs are more effective. Meanwhile, the relationship between public debt and growth remains context-dependent, with moderate, well-targeted debt often supporting recovery in times of crisis. An emerging theme in the literature is the evolving role of fiscal policy in addressing sustainability and social inclusion goals, underscoring a shift from short-term stabilization to long-term structural transformation. The findings emphasize that fiscal policy must be contextually tailored, efficiently implemented, and strategically aligned with national development priorities to maximize its growth enhancing potential