Macroeconomic Policy, International Openness and Economic Growth: Panel Data Evidence from G20 Countries

Abstract

This empirical study shed light on the impact of macroeconomic policy and international openness on economic growth among members of the G20 countries using panel data regressions. Data for this study were collected from 1991 to 2019, covering 29 years. Macroeconomic policy was measured by general government final consumption expenditure, overall balance, and inflation rate, whereas international openness was measured by openness to trade and foreign direct investment. The study concludes that 1) Macroeconomic policy had a statistically robust impact on economic growth. 2) Government consumption and inflation rate negatively affect economic growth 3) Overall balance was positively correlated with growth. 4) The impact of international openness indicators on growth was found to be statistically insignificant 5) Some of the indicators were sensitive toward the level of development of the countries.