Investigating the Relationship Between Budget Deficits and Economic Growth Using the System-Generalized Method of Moments (SYS-GMM)

Mehnatfar, Uosef; CheshmAghlideh, Milad; Aghaei, Majid

doi:10.30473/jier.2024.69998.1428

Document Type : applicative

Authors

¹ Associate Professor of Economics, Faculty of Economics and Administrative Sciences, Mazandaran University Department of Energy Economics, Babolsar, Iran

² Master's student in Economics, Faculty of Administrative Sciences, Mazandaran University, Babolsar, Iran

³ Associated Professor of Economics, Department of Economics, University of Mazandaran, Babolsar, Iran..

10.30473/jier.2024.69998.1428

Abstract

governments worldwide are actively optimizing budget efficiency. This research aims to examine the relationship between government budget deficits and economic growth, emphasizing developed and developing countries, particularly the D8 group, during the period from 2010 to 2021, using the System Generalized Method of Moments (SYS-GMM). The results show that in developed and developing countries, especially the D8 group, the negative coefficient of the budget deficit on economic growth can be attributed to concerns such as the effect of congestion, high interest rates, or a decrease in trust in the economy due to financial imbalances and support for the neoclassical approach. In addition, there is an almost one-to-one positive effect between past economic growth and the current level of economic growth. However, this research helps to understand the sustainable impact of budget deficits on current economic conditions in developed and developing countries. Regarding the findings, policymakers should consider adopting contraptions that promote sustainable economic growth while exercising caution in budget deficit management.

Keywords

Main Subjects

Industrial Economics, Structure_Conduct-Performance

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Journal of Industrial Economics researches

Investigating the Relationship Between Budget Deficits and Economic Growth Using the System-Generalized Method of Moments (SYS-GMM)

References

References

Volume 7, Issue 24
July 2023
Pages 103-118

Investigating the Relationship Between Budget Deficits and Economic Growth Using the System-Generalized Method of Moments (SYS-GMM)

References

References

Volume 7, Issue 24July 2023Pages 103-118

Volume 7, Issue 24
July 2023
Pages 103-118