A study to gain insights into effectiveness of fiscal policy between countries with high and low public debt, pre- and post- 2007 great recession

The Great Recession in 2008 has provided the researcher with an opportunity to study the effectiveness of fiscal policy in high debt and low debt countries in the pre-recession and post-recession period. The research was centred around the effect of national debt level on the effectiveness of fiscal stimuli which has become increasingly crucial in the current economic condition as increasing number of countries has fallen into the high debt category. In order to investigate the impact of fiscal stimuli in different national debt level countries, the researcher has utilised hierarchical multiple linear regression model. In this study, the researcher has performed preliminary statistical analysis of fiscal stimulus, investigation of the behaviour of the marginal propensity to consume (MPC) and investment slope coefficient before performing the hierarchical multiple linear regression analysis. Result for hierarchical multiple linear regression analysis on high and low debt countries suggested that the effect of fiscal stimulus in low debt countries were larger than the effect of fiscal stimulus in high debt countries. This research is important because better understanding of the impact of national debt on fiscal policy could add to the current literature bodies on the researched topic. From a policy perspective, these findings could provide additional support to national economic policymakers to design substantially enhanced, effective and efficient fiscal stimulus packages