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

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.