Fiscal policy for sustainable development: achieving social and ecological goals

Public spending on care services and infrastructure generates very strong fiscal multipliers—raising GDP by around 11% and employment by 6% after five years—effectively expanding fiscal space as higher national income brings in greater revenues. Such investments should be treated as public investment in social infrastructure rather than current spending, requiring long-term strategic financing, patient capital, and potential borrowing Progressive taxation of wealth and income is needed to fund these programs while reducing inequality and strengthening fiscal sustainability. This article is part of the Brookings Center for Sustainable Development compendium “Innovations in public finance: A new fiscal paradigm for gender equality, climate adaptation, and care.” To learn more about the compendium’s chapters, cross-cutting themes, and policy-relevant insights, see the “Introduction: Six themes and key recommendations for embedding gender equality, care, and climate in fiscal policy.”