MACROECONOMIC DETERMINANTS OF ECONOMIC GROWTH IN EUROPEAN UNION MEMBER STATES

Abstract

Background: Research on economic development represents an important factor in ensuring sustainability and competitiveness in today’s global economy, which is influenced by various threats and shocks. Aims: The main objective of the paper is to identify and quantify the impact of selected macroeconomic factors on economic performance. Sample: The study examines the macroeconomic determinants of economic development—public debt, budget deficit, unemployment, dependency ratio, and inflation (HICP)—in the member states of the European Union over the period 2013–2024. Methods: The research is based on the analysis of secondary data processed using a linear regression model. Due to the confirmed presence of heteroskedasticity in the dataset, robust standard errors of the HC3 type were applied in the estimation of parameters. Results: The results of the analysis showed that the fiscal balance was statistically significantly associated with real GDP growth, reflecting the close relationship between economic performance and public finances, particularly during crisis periods. Conversely, unemployment and the old-age dependency ratio were identified as statistically significant negative factors, confirming the increasing sensitivity of European economies to demographic changes and labour market inefficiencies. Public debt and inflation did not prove to be statistically significant determinants within the selected model, which is explained by the specific environment of low interest rates and the broad nature of price shocks. Implications: There is a need for structural reforms aimed at mitigating demographic risks and maintaining the long-term stability of public finances in a changing macroeconomic environment.