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EFFECTS OF GOVERNMENT BUDGET BALANCE ON ECONOMIC GROWTH

Authors

Keywords
Public revenues, budget balance, budget deficit, budget surplus, economic growth.

Summary
The necessity of adequate use of public budget as a fiscal instrument for economic regulation is even more tangible in conditions of slow economic growth rate. The debate on whether the public budget can maintain a balance between economic stability and social equity has a long history. Another question is whether budget deficit or budget surplus would trigger higher economic growth.

The main objective of the empiric analysis is to evaluate the budget deficit/ surplus impact on real economic growth rate by using econometric analysis and comparative analysis between Bulgaria and the other Member States of the European Union as well as the Balkan States (Cyprus, The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia, Romania, Croatia, Greece, Serbia, Turkey and North Macedonia).

The specific task is to justify the need to balance the public budget and reduce the budget deficit in order to achieve sustainable real economic growth.

The thesis of the research is that balancing public budget and reducing distributive and redistributive government activities contribute to higher real economic growth rate in the analyzed Bulgarian and European economies.

The main results of the research prove that reduction of budget deficit and balanced government budget have a positive effect on realized economic growth rate in the analyzed European countries over the period 2007 – 2018.

JEL: H50, H54, H56.
Pages: 26
Price: 3 Points

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