  This paper revisits the discussion on determinants of budget balances and
investigates the change in their effect in light of the COVID-19 crisis by
utilizing data on 43 countries and a system generalized method of moments
approach. The results show that the overall impact of the global pandemic led
to a disproportionate increase in the magnitude of the estimated effects of the
macroeconomic determinants on the budget balance. However, we also find that
more developed economies were able to undertake higher stimulus packages for
the relatively same level of primary balance. We believe that one of the
factors affecting this outcome is that that they exhibit a higher government
debt position in domestic currency denomination.
