THE IMPACT OF GOVERNMENT EXPENDITURE ON GOVERNMENT DEBT FOR G20 ECONOMIES

Abstract

This paper carefully examines the effect government expenditure has on government debt using time series data for G20 economies from the past 20 years. A regression model is estimated to study the impact of government expenditure on government debt, taking into account necessary control variables. The results show that government expenditure has a significant impact on government debt. The results provide useful policy implications for the G20 economies by suggesting mechanisms by which government expenditure can be effectively leveraged to mitigate government debt.