Macroeconomics › Section R · The impacts of government borrowing › Topic R.4
Fiscal policy, investment, and growth
Long-run growth rests on more and better machines, more skilled workers and new ideas. Government budgets touch all three: heavy borrowing can squeeze private investment, while well-chosen public spending on infrastructure, education and research can raise the economy's potential.
In this topic
- Two ways budgets shape growth
- Public physical capital
- How the project is paid for
- Worked example: is a bridge worth borrowing for?
- Investing in people
- Paying for new ideas
- Supply-side tax policy
- Worked example: why small growth gains matter
- Deficit cuts, rules and growth
- Common mistakes to avoid
- Key takeaways
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