| dc.description.abstract | Long-term economic growth is a reflection of economic prosperity of a country. Government manages the fiscal policy to increase economic growth. The main purpose of this scientific work is to study the effect of government spending composition and tax rate, which are parts of fiscal policy, towards economic growth in long-term equilibrium or steady state. In the neoclassical model, the economy of a country will reach the steady state if the capital per capita reaches a stable level, with the assumption, government can influence the private capital accumulation through the tax rate, and influences the public capital accumulation through the government spending composition. The simulation section of this paper shows the effect of tax rate and government spending composition towards economic growth are not monotonic. Moreover, tax rate and government spending composition can optimize the rate of economic growth. | en |
