Abstract
Regardless of the fact that, historically speaking, fiscal policy was generally viewed as stabilizing, its flexibility in modern conditions can also have a developmental effect on the specific national economy. In this paper, it will be discussed in detail about the development impact of short-term and long-term development measures of the fiscal policy of the EU countries and the Republic of Serbia. Special attention will be paid to the impact of fiscal policy on innovation and productivity, as well as the impact on economic growth and the increase in social standards. The mechanisms by which the fiscal policy positively affects the encouraging of research and development, the motivation for innovative entrepreneurship, the stimulation of state investments and the inflow of foreign direct investments, strongly influence the increase of national productivity, innovation, competitiveness and, in the last instance, economic development.