THE EFFECT OF MACROECONOMIC INDICATORS ON ECONOMIC GROWTH IN LITHUANIA

Abstract

Economic growth is important for all countries of the world, regardless of their level of development, because it determines the standard of living of citizens and reduces the gap between countries of the world. In this paper, an analysis of scientific literature is carried out, which helps to identify different factors on economic growth, as and a methodology of the research process is also created, which includes selected methods to determine the relationship between the variables. The research study analyzed the influence of personal income tax, corporate income tax, investment, inflation rate, and unemployment rate on economic growth in Lithuania from 2003 to 2022. Analyzing, calculating, and evaluating the long-term and short-term relationship between GDP growth rate and macroeconomic indicators in Lithuania was used the bounds testing procedure to cointegration, within an autoregressive distributive lag (ARDL) framework. The short-run results show that the coefficient of the lagged error correction term is negative and statistically significant. This confirms the existence of long-run cointegration between the independent variables and GDP.