The Impact of Fiscal Deficit on Economic Growth: Evidence from Europe

Proceedings of The 4th International Conference on Advanced Research in Business, Management and Economics

Year: 2021

DOI:

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The Impact of Fiscal Deficit on Economic Growth: Evidence from Europe

Maryna Bohach and Tetiana Paientko

ABSTRACT: 

The purpose of this study is to determine the impact of fiscal deficit on economic growth to find out whether it is possible to promote economic growth through reduction of the gap between government revenue and expenditures. The sample consists of thirty-seven European countries according to United Nations approach. The findings demonstrate that in the case of developed countries the budget deficit reduction could be one of the tools of accelerating economic growth. For developing countries, this method should not be used, as the deficit has no significant impact on GDP per capita.

Keywords: budget deficit, GDP per capita, gross capital formation, net export.