The Correlation Relationship between Fiscal Policy and Economic Growth Case of Albania

Abstract

Fiscal policies are important predictors of economic developments. Often government decisions on spending and taxation play an important role in speeding up or slowing economic growth. Fiscal policy in Albania has been under continuous observation thorough reform of spending and tax collection system. Fiscal policy has always been an issue of interest to policymakers in Albania because of its effects on economic growth, prices and interest rates. This paper analyzes the effects of fiscal policy on economic growth in a small country with an open economy , in developing and transition system still unfinished as Albania. The purpose of this paper is to highlight how public activity through taxation and spending policies has served to stimulate economic growth. To achieve his goal, this paper presents a broad overview of theoretical viewpoints and empirical studies focused on this issue. Correlation used and descriptive analysis will reflect the link economic growth- fiscal policy for Albania. It will also analyze the changes in the legislation on taxation and tax reforms after years of transition and their impact on economic growth.

DOI: 10.5901/mjss.2014.v5n13p322