7, pp. 2, pp. The effects of discretionary fiscal policy on other injections and withdrawals in the economy. 44 No. (1998), “Democracy, economic freedom, fiscal policy, and growth in LDCs: a fresh look”, Economic Development and Cultural Change, Vol. 408-415. (2014), “Crowding-out or crowding-in? (2016), “Fiscal deficits, financial fragility, and the effectiveness of government policies”, Journal of Monetary Economics, Vol. 7 No. In the literature of fiscal policy effectiveness, it is natural place to start with the Keynesian theory. The significant positive impact of lag economic growth to itself shows that the higher economic growth in current year creates better conditions for growth in next year. Moreover, they emphasize that the fiscal policy presents decreasing effects in a small open-economy scenario. THE EFFECTIVENESS OF VARIOUS FISCAL MEASURES TO STIMULATE THE ECONOMY In the debate on the fi scal policy response to the economic downturn, the effectiveness of fi scal stimulus measures and the appropriate composition of fi scal stimulus packages to increase aggregate demand and stabilise the economy has recently gained importance. Fiscal policy is a policy adopted by the government of a country required in order to control the finances and revenue of that country which includes various taxes on goods, services and person i.e., revenue collection, which eventually affects spending levels and hence for this fiscal policy is termed as sister policy of monetary policy. Nelson and Singh (1998), for instance, argue that a democratic political system permits active in a voluntary way, at the same time it creates competitive market forces conditions for economic growth. The results are consistent with literature and many previous empirical results. Adam and Bevan (2005) investigate the relationship between fiscal deficits and economic growth for a panel of 45 developing countries and find evidence of a 1.5 percent GDP threshold deficit effect. This relationship may explain the mechanism for the non-linear relationship between external debt and economic growth. Blinder, A.S. and Solow, R.M. 83 No. 213-220, available at: https://doi.org/10.1016/j.econmod.2014.02.032. 2, pp. Şen, H. and Kaya, A. WP/02/208, IMF, Washington, DC. 127-132, available at: http://dx.doi.org/10.1016/j.pscr.2014.08.023. Many previous studies have investigated the effects of fiscal policy in many countries, especially in advanced countries such as USA, Japan, European area[1]. For example, Cuadra et al. Coddington, A. In addition, the empirical results also suggest us essential measures for the government in dilemma of ineffective fiscal policy when they are in high indebted level that they should focus on the institutional improvement, which enhances the effectiveness of fiscal policy in one hand, it has positive impacts directly on economic growth on the other hand. Monetary and Fiscal policy both have their pros and cons. Williamson, O.E. 195-220, available at: http://dx.doi.org/10.1016/j.jce.2007.11.004, Amato, A. and Tronzano, M. (2000), “Fiscal policy, debt management and exchange rate credibility: lessons from the recent Italian experience”, Journal of Banking & Finance, Vol. (2008), The Role of Institutions in Growth and Development, World Bank, Washington, DC. Fiscal policy refers to economic decisions and actions of a government used to control and stabilize a country's economy. Mundell, R.A. (1963), “Capital mobility and stabilization policy under fixed and flexible exchange rates”, Canadian Journal of Economics and Political Science/Revue canadienne de economiques Et Science Politique, Vol. Second, even the fiscal policy has positive effects on economic growth; the study finds interesting evidences that fiscal policy loses this effect in the case of high indebted countries. The authors use panel data from 2002 to 2014 from 20 emerging markets and use GMM estimators for unbalanced panel data. The effects of fiscal policy on economic growth are driven by many factors such as the employment in the economy, the transparency of government, the composition of government expenditures, or even the government size (see Kasselaki and Tagkalakis, 2016; Hemming et al., 2002 ). The results find significant evidences that the institutions enhance the effectiveness of fiscal policy. 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