The Impact of Government Debt on Economic Growth in North Macedonia

Abstract

This paper investigates the impact of the North Macedonian government debt on its economic growth through an econometric analysis. The data consists of relation between domestic and foreign general government debt to economic growth in North Macedonia. For this purpose, the appraisal utilizes the model of autoregressive distributed lag exploiting yearly data for the time-frame 1999 - 2020. Moreover, the assessment comprised additional variables to control the main variables and they are the following: Debt service payments, Foreign reserve position, Gross fixed capital formation as a percentage of GDP and Foreign Direct Investment inflow as a percentage of GDP. The data are converted to natural logarithm and it is found a solid negative relationship of domestic and external government debt to real growth rate of gross domestic product.