The Relation Between Fiscal Policy, Debt Burden, And Macroeconomic Performance In G20 Countries: An Empirical Study With Annual Data

Abstract

This study aims to analyze the relationship between budget balance, public debt, and GDP growth in G20 countries. The study used annual secondary data from reliable sources, such as the World Bank, the International Monetary Fund, and the Organization for Economic Co-operation and Development. This study uses multiple linear regression analysis method with dependent variable of GDP growth and independent variable of budget balance and public debt. The results showed that budget balance has a positive effect on GDP growth, while public debt has a negative effect on GDP growth. This implies that prudent and sound fiscal policy can improve macroeconomic performance and reduce the burden of public debt. However, regression models can only account for about 13.4% variation in GDP growth, meaning that there are still other factors that need further investigation. Therefore, future research can use panel data, add control variables, and analyze the impact of the global economic crisis.