DETERMINANTS OF PUBLIC DEBT - COMPARATIVE ANALYSIS OF EUROPEAN COUNTRIES

Abstract

The country's public debt is one of the main macroeconomic indicators of a country's stable economy. The authors in this study try to explain the diversity of the effects of many macroeconomic indicators on the public debt of developed and developing countries. The sample of the study includes 12 countries, of which the countries are divided into two groups. The first group includes developed countries while the second group includes developing countries. The aim of the study is to analyze and compare the effects of macroeconomic factors on the public debt of countries. The authors use the statistical software E-views where at the beginning of the study they analyze the descriptive data of developed and developing countries. After that, a series of diagnostic tests are performed, such as unit root tests and the derivation of the correlation matrix in order to reject the hypotheses of non-stationarity and collinearity. At the end of the research, the authors use the POLS method and the Fixed effect model to interpret the effects of independent variables on the dependent variable of public debt. The study covers the period from 1998 to 2023 and includes projections for the year 2024. An additional goal of the study is to observe and analyze the movement of macroeconomic factors in crisis and recessionary periods of the world economy. These findings will be useful to regulators who are developing, amending, or implementing public debt laws, policies, and regulations.