Klaipėdos universitetas

Income inequality has received widespread attention in the scientific literature. Income inequality has a significant impact on the health and education levels of the population, as well as increases social tension and crime rates, however there is less research on the impact of income inequality on people`s overall life satisfaction. In Lithuania and Latvia, income inequality expressed by the Gini index of disposable income is among the highest in the EU, whereas in Estonia, income inequality is slightly higher than the average in the EU. Similar results are also found for the Lithuania and Latvia regarding overall life satisfaction, which is among the lowest in the EU, while overall life satisfaction in Estonia is somewhat lower than the average in the EU. The aim of the research is to assess whether income inequality has a negative impact on people`s overall life satisfaction and to evaluate how fiscal policy has affected income inequality and overall life satisfaction in the Baltic States. The results of the research show that income inequality and life satisfaction are negatively correlated, and that fiscal policy has reduced income inequality in the Baltic States, expressed by the Gini index based on market income, on average by 30%.

The Great Financial Crisis (GFC) of 2008 to 2010 increased the size of the public debt and decreased the fiscal space. The problem stems from the fact that fiscal resources are limited. Many OECD countries had used a substantial part of their limited fiscal space. Researchers suspected that higher levels of public debt in the future could slow down GDP growth. The first attempts to detect the tipping point at which GDP growth stalls or loses steam were made right after the GFC. However, the discussion was left open. The Covid-19 crisis required the further use of unprecedented amounts of fiscal stimulus resources to stabilise the economic situation. The objective of this paper is to establish whether new data of elevated public debt levels in relation to GDP confirms that higher levels of debt to GDP have an impact on future GDP growth and future financial stability. Debt and GDP data from OECD countries for the years 2000 to 2026 was used in order to carry out multilinear regression analysis, establishing the relationship between debt and future GDP growth. The results provide compelling evidence that the accumulation of higher debt levels slows down GDP growth, and require more fiscal resources in the future to stabilise the economic situation, compared with countries with lower accumulated public debt levels. Hence, higher inflation will require even more resources to service the debt.