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In the context of increasing globalization, income inequality becomes one of the severe problems in both advanced and developing economies. Meanwhile, public spending financed by public debt may be an appropriate instrument of fiscal policy to narrow this inequality in society. However, high public debt can lead to an economic crisis and social instability. Does public debt differently affect income inequality between advanced and developing economies? For the answer, the paper applies the two-step system GMM Arellano-Bond estimator and the PMG estimator to test the effect of public debt on income inequality for a group of 30 advanced economies and a group of 34 developing economies between 2002 and 2020. The paper notes some exciting results. First, public debt narrows income inequality in advanced economies but widens it in developing economies. Second, by contrast, economic growth increases income inequality in advanced economies but decreases it in developing economies. Third, unemployment in advanced economies and education in developing economies enhance income inequality. These findings suggest some policy implications for governments in developing economies in using appropriately spending financed by public debt to narrow income inequality in society. [ABSTRACT FROM AUTHOR]

In 2021, a group of economists launched a proposal asking for the write-off of the public debt built-up in the ECB's balance sheet and an increase in public spending for a similar amount. This proposal generated strong criticism, which can be organized into three blocks: (i) debt relief occurs when a central bank purchases public debt, and its cancellation does not improve the situation faced by governments; (ii) the proposal is grounded in an erroneous concept of 'fiscal space', and there are better alternatives for the financing of public spending; (iii) the proposal would be counterproductive or illegal. This article rebuts those criticisms, finding the plan helpful to avoid a return to fiscal austerity. More specifically, debt cancellation makes quantitative easing, the unconventional monetary policy that justified the purchase of public debt, irreversible whilst simultaneously increasing the fiscal space of Eurozone Member States. Finally, and most relevant, the proposal includes a specific commitment to an increase in public spending. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Economics & Administrative Sciences is the property of Republic of Iraq Ministry of Higher Education & Scientific Research (MOHESR) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purpose - The stock-flow adjustment variable is rarely discussed among the variables considered in the assessment of the sustainability of public finances. First of all, it is an expression of the extra-budgetary financial operations that cause a change in the size of the public debt. The purpose of this article is to evaluate the impact of fiscal variables, such as the fiscal balance and government debt, on the size of the stock-flow adjustment. Research method - The article uses statistical analysis and panel data modelling. The study covers the period from 2002 to 2022. Eurostat data for 27 European Union countries were used. Results - The study found a statistically significant relationship between the stock-flow adjustment and three variables. The size is influenced by public debt, budget deficit and GDP dynamics. The variables indicate the effect of economic improvement on reducing the size of the stock-flow adjustment. On the other hand, an increase in public debt and an improvement in the budget balance contribute to an increase in the size of SFA. Originality / value / implications / recommendations - In general, the literature concerns the components of the stock-flow adjustment and the causes of its formation. It's mainly concerned with the nature of the transactions that cause the rise or fall of public debt. Particular attention is paid to creative accounting. In contrast, the study presented in this article allowed us to demonstrate the relationship between the size of the public debt, the budget balance and the dynamics of GDP with the size of the stock-flow adjustment. [ABSTRACT FROM AUTHOR]

Since the full-scale invasion of Russian Federation, public finances (PF) have been operating under conditions of uncertainty and unprecedented security challenges, akin to those experienced by the entire economic system. The level of uncertainty is such that it overshadows the current financial crises and parity with the consequences of the Second World War. This became the core objective of the study, which consisted of substantiating conceptual approaches to the formation of debt policy, considering the peculiarities of the projection of martial law on the functioning of PF. The research employs a systematic approach to methodology, integrating methods of factual and situational analysis that are grounded in international standards for public debt assessment and theoretical generalisations. Furthermore, through a comparative analysis, the interrelationships and mutual influences between debt policy and budget strategy are monitored. Furthermore, the study assesses the potential of leveraging the frozen Russian assets to support Ukraine's post-war recovery through the PF system. The study revealed that the debt policy is an integral component of the PF system. Unlike other program documents, it demonstrated resilience to both endogenous and exogenous challenges and the capacity to implement corrective measures during economic crises. This has laid the foundation for a Marshall Plan-like strategy for Ukraine. The PF strategy, which was approved just before the outbreak of the Russian-Ukrainian conflict, prompted discussions on enhancing the predictability of budgetary policy and debt sustainability. This, together with the adoption of a medium-term public debt management strategy, became the basis for the actual establishment of the Debt Agency as a legal entity, which in the future will ensure, on the one hand, the privileging of grants among the financial mechanisms for covering the budget deficit, and, on the other hand, an additional level of budgetary strategy for generating a multiplier effect from the borrowed funds for post-war reconstruction. On the other hand, this approach will create conditions for the transition from external sources of financing the budget deficit to internal ones by expanding and diversifying the range of investors in government securities. It is proved that debt policy in both the short and medium term will serve as the basis for the implementation of the budgetary strategy of post-war reconstruction, and will create conditions for accelerating the process of forced reparations to compensate for the damage caused by the Russian Federation.

Russia’s open aggression against Ukraine has resulted in significant changes across all sectors of the Ukrainian economy and its financial sphere, including financial security. The paper aims to identify the impact of the primary macroeconomic determinants, i.e., military defense spending, non-performing bank loans, exchange rate, foreign debt, and state (total) reserves, on the financial security of Ukraine under martial law. The canonical correlation analysis is employed to assess the strength of the relationship between the above macroeconomic indicators and the level of the state’s financial security. It was found that the reduction of the state’s financial security level in 2022 was 63.9%, explained exactly by the changes in the above macroeconomic determinants after the start of a full-scale invasion. The study determined the degree of influence of each indicator on Ukraine’s financial security level. An increase in the level of military defense spending, non-performing bank loans, hryvnia’s devaluation, and external debt growth had a direct negative impact on Ukraine’s financial security. At the same time, an upsurge in total reserves had an indirect negative impact (through the external debt growth). The research findings confirm the necessity for effective monitoring and management of the macroeconomic indicators to maintain both Ukraine’s financial security and macro-financial stability in order to ensure its’ sustainable economic development during the postwar recovery period. AcknowledgmentThis research is financially supported by the NATO SPS Program “Security of territorial communities: evidence from the Eastern European countries”.

This study aims to investigate the relationship between government revenue and capital expenditures in Jordan from 2003 to 2022, with public debt as the moderating variable. Utilizing data from the Jordanian Ministry of Finance’s final accounts and the Central Bank of Jordan’s reports, the study employed regression analysis techniques in the statistical software E-Views to test the study’s hypotheses. The findings reveal a positive relationship between revenue and capital expenditures, indicating the significance of revenue in determining the level of capital expenditures. Additionally, a positive relationship is observed between public debt and the magnitude of capital expenditures, suggesting that a portion of capital expenditures is covered by government revenues while the remaining portion is financed by public debt. Upon introducing the moderating variable (public debt) into the analysis, the impact of public debt on the relationship between revenue and capital expenditures becomes evident, indicating that public debt strengthens the relationship between revenue and capital expenditures. In light of the study’s findings, the government should focus on enhancing and increasing revenue and financing sources while rationalizing expenditures. Moreover, it should strive to improve its services and infrastructure to attract more investments and reduce public debt.

Twin deficit is the simultaneous occurrence of budget deficit and current account deficit, which has adverse effects on the performance of various sectors of the economy. On the other hand, filling the twin deficit gap by relying on public debt is harmful to the economy if it exceeds the limits. In this study, the relationship between the twin deficits hypothesis and the role of sukuk as a new financing solution in compared with public debt financing have been investigated in 14 sukuk issuance selected countries. The data was analyzed using the General Method of Moment (GMM). The studied sample includes countries with a high volume of sukuk issuance in the period of 2012-2021. The findings show that with the presence of public debt, the effect of the budget balance on the current account balance increased from 0/46% to 0/68%, and the size of the net coefficient estimated at 0/22% indicates the strengthening of the twin deficit relationship. On the other hand, with the existence of sukuk, the positive relationship between the budget balance and the current account balance decreases from 0/75% to 0/66%, which weakening the twin deficits by almost 0/10%. In fact, the results indicate that sukuk can improve the current account balance in the direct method and in the indirect method, through Ricardian considerations, by compensating changes in savings, it can lead to the reduction of the twin deficit relationship. In fact, efficient financial instruments may implement Ricardian properties in economies and reduce the effect of fiscal policies on the current account. [ABSTRACT FROM AUTHOR]

The public debt expresses the sum of the amounts borrowed by the central public administration, territorial administrative units and other public entities from natural or legal persons (in the internal market and on the external market) and remaining to be repaid at a given time. The amount of public debt is a fundamental indicator for the sustainability of a country's public finances. If public debt is at a very high level, as a percentage of gross domestic product (GDP), it may signal difficulties in meeting financial obligations, which can lead to economic instability. In this article we intend to analyse the structure and evolution of the public debt of Romania motivated by the fact that lately it is recording a significant increase. In the first part of the paper, we clarified some theoretical aspects regarding public debt by presenting the notion, forms and indicators of appreciation of public debt. In the second part of the paper, we conducted the analysis of the evolution and structure of the public debt of Romania based on the official data available on the website of the Ministry of Finance, Public Debt Section. We note that in the period 2017-30 April 2024, public debt increased almost threefold and gross domestic product doubled. So economic growth has not kept pace with the growth of public debt. Alarming is not necessarily the size of the public debt or the percentage it holds in gross domestic product. Most countries use loans to finance various public expenditures. What we should worry about in Romania is the lack of balance and fiscal discipline that the governors of our country show year after year. [ABSTRACT FROM AUTHOR]

Public debt is determined by borrowings undertaken by a government to finance its short- or long-term financial needs and to ensure that macroeconomic objectives are met within budgetary constraints. In Romania, public debt has been on an upward trajectory, a trend that has been further exacerbated in recent years by the COVID-19 pandemic. Additionally, a significant non-economic event influencing Romania's public debt is the war in Ukraine. To analyze this, a stochastic debt sustainability analysis was conducted, incorporating the unique characteristics of Romania's emerging market into the research methodology. The projections focused on achieving satisfactory results by following two lines of research. The first direction involved developing four scenarios to assess the risks presented by macroeconomic shocks. Particular emphasis was placed on an unusual negative shock, specifically the war in Ukraine, with forecasts indicating that the debt-to-GDP ratio could reach 102% by 2026. However, if policymakers implement discretionary measures, this level could be contained below 88%. The second direction of research aimed to establish the maximum safe limit of public debt for Romania, which was determined to be 70%. This threshold would allow the emerging economy to manage a reasonable level of risk without requiring excessive fiscal efforts to maintain long-term stability. [ABSTRACT FROM AUTHOR]

The literature has long analysed optimal taxation policies in economies where tax evasion is widespread. Nevertheless, very little has been produced on the relationship between public debt, tax evasion, and long-term economic growth. In this article, we investigate the relationship between sovereign debt sustainability and tax evasion by computing under which conditions the debt/GDP ratio is endogenously mean reverting in the context where tax evasion may increase the public debt and public expenditure is used to finance public and merit goods. For a log utility consumer, the level of tax evasion has no effect on the mean reverting conditions while the same is not true for more general functional forms. Finally, we conclude that allowing for tax evasion is not a suitable policy to make the debt/GDP ratio stable over time, especially in low-growth economies. [ABSTRACT FROM AUTHOR]

This article assesses the dilemma that most governments face when seeking to ensure the sustainability of their public finances through economic growth while simultaneously protecting the environment. We propose a growth model in which the government finances abatement-spending through taxation or public debt and which follows a fiscal rule that targets the long-run debt-to-GDP ratio. We show that there is a threshold for the debt ratio below which debt and environmental sustainability are secured. In steady state, the debt ratio exerts a nonlinear effect on environmental quality in the form of an inverted U-shaped curve, and the environmental tax is good for the environment when public debt is not. A fiscal rule authorizing a small but strictly positive debt ratio could help the government to implement adaptation policies for environmental protection while supporting long-run economic growth. [ABSTRACT FROM AUTHOR]

In this contribution, I discuss the divergence of German and French public finances over the course of the last two decades. Major gaps in public deficit/debt levels and debt service costs have opened even under the presence of a common fiscal framework at the EU level. To explain these differences, I focus on three elements: the (non-)perception of budgetary and socio-economic crisis, differences in demographic conditions, and contrasting approaches towards the role of rules and expertise in fiscal policymaking. The contribution illustrates these points by providing two concise case studies on key developments in fiscal policymaking and institutions since the 1990s. I conclude with a brief reflection on German and French fiscal policymaking in the years to come. [ABSTRACT FROM AUTHOR]

Copyright of Pacha: Journal of Contemporary Studies of the Global South / Revista de Estudios Contemporáneos del Sur Global is the property of PACHA REVISTA DE ESTUDIOS CONTEMPORANEOS DEL SUR GLOBAL and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Using three complementary approaches that examine the fulfilment of the intertemporal budget constraint while avoiding explosive behaviour, this study examines the stationarity and the sustainability of public finance for six industrial countries over the period spanning from 1870 to 2017. According to Fourier DF unit root tests, time-varying fiscal reaction functions and threshold reaction functions, we find that longer-run debt sustainability is not rejected for the UK, Sweden, and for the US. The evidence is somewhat equivocal for Canada, Italy and Portugal. [ABSTRACT FROM AUTHOR]

Copyright of Annuals of the Administration & Law / Roczniki Administracji i Prawa is the property of Oficyna Wydawnicza Humanitas and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Crisis conditions in the 21st century also reached the European Union countries, including Poland, and were reflected in the nominal and real economy. In particular, what suffered most was the fiscal condition of individual countries. To support the state of the economy, the economic authorities often took extraordinary, unconventional actions, which unfortunately resulted and still result in a deterioration of the state of public finances. It is therefore worth referring to this research and empirical problem from the perspective of the current and ongoing economic crisis. [ABSTRACT FROM AUTHOR]

This study investigates the asymmetric effects of fiscal policy on inflation (INF) in Kenya using data for the period from 1991 to 2021. The study differs from previous studies by applying the non-linear autoregressive distributed lag (NARDL) modeling to capture asymmetric dynamics. The study identified a long-run equilibrium and cointegrating relationship among the study variables, with the findings indicating the existence of asymmetric long-run effects of public debt (PD) and government spending (GS) on INF. A positive relationship between increases in PD and INF in the short-run is also established, while decreases in PD are found to increase INF in both the long-run and short-run. Increases in GS raise INF, while decreases in tax revenue (TR) reduce INF in the long-run. Output gap has a persistent positive relationship with INF, while interest rate negatively affects INF. As such, the study recommends that policymakers should prioritize fiscal measures, especially government expenditure by ensuring that any additional spending does not cause inflationary pressures. The government should also regulate PD by ensuring that its levels align with the objective of INF control. Impact statement: Governments use fiscal policy tools such as spending and taxation to influence macroeconomic performance. However, Kenya's government has been unable to maintain a sustainable fiscal policy due to an imbalance between government expenditures and revenues. In recent years, government spending has consistently exceeded its revenues, resulting in the need to borrow in order to finance its fiscal targets, creating a burden of debt accumulation. This has made it more difficult to finance essential public services and hindered the achievement of the medium term plan's (MTPs) targets for the realization of the Kenya's Vision 2030. This study examines the asymmetric effects of fiscal policy on inflation in Kenya using the non-linear autoregressive distributed lag (NARDL) modelling to provide a better understanding of Kenya's inflation. This helps to inform the policymakers on decision making and careful approach to the fiscal policy strategies. [ABSTRACT FROM AUTHOR]

This paper presents an analytical overview of the effects of inflation on government revenues, expenditure and fiscal positions. Evidence for a range of countries from the current inflation episode and that of the 1980s is compared and contrasted. The key finding is that high inflation initially boosts tax revenues and improves fiscal positions, but expenditure quickly catches up and offsets this improvement. The short-term boost is partly due to structural changes that have made modern tax systems more elastic with respect to inflation. The medium-turn deterioration reflects a shift toward spending items more responsive to inflation. The key risk is that the impression of abundant tax revenues will lead to spending programmes or tax cuts that damage public finances in the long term. As research on inflation and public finances has been dormant since the 1980s, this analysis fills a gap in our understanding of the fiscal consequences of inflation. [ABSTRACT FROM AUTHOR]

Purpose: The pandemic of Covid-19 virus between 2020 and 2021, brought about limitations in proper functioning of economies not seen until that moment. These constraints were accompanied by a radical increase in public spending that was supposed to be financing measures shielding various industries and sectors, which were forced to put their activity on pause. The purpose of this article is to thoroughly analyze the impact of the Covid-19 pandemic on the stability of public finance in the face of increasing government spending as well as multiple pro-inflationary factors. Design/methodology/approach: Sound public finance is one of the most crucial challenges for the economic policy system of every country no matter the level of the liberalization of their economies. This stability is commonly regarded as the indicator of a country's financial credibility which directly affects the capital markets. It translates into confidence or lack thereof in financial securities. Fading public trust in the economy of a country calls for raising interest rates which consequently increases the cost of public debt management. The methodology used in the publication is based on the analysis statistical sources and literature reports relating to the stability of public finances of UE countries during the pandemic of Covid-19. Findings: Undoubtedly, the most important cognitive values included in the paper are the problem of the resilience of national public finances to external shocks and their ability to stabilise them in the long term. Practical implications, originality and value: There is no doubt that the last few years have brought some of the greatest challenges in the history of the modern world economy, such as the Covid-19 pandemic and the ongoing war in Ukraine. Both of these factors have caused lasting damage to public finances and require new, creative measures to ensure stability and national security. These topics are undoubtedly very important from an economic and scientific point of view and should be the subject of further in-depth research. [ABSTRACT FROM AUTHOR]

The experience of dealing with the socio-economic consequences of the Covid-19 pandemic and the war in Ukraine confirms the thesis that decisions on financial assistance must be taken without delay and that the government must have a certain degree of freedom and flexibility to act. However, do emergencies entitle governments to bypass the principles of responsible and transparent fiscal policy-making? Do the challenges countries face in dealing with the effects of the Covid-19 pandemic and the war in Ukraine also legitimise governments' furthering of the debudgetisation of public finances? This article aims to answer these questions. The background of the considerations will be an analysis of Polish legal solutions and systemic practice. First, it is worth noting that anti-crisis measures in Poland have been taken primarily through extra-budgetary financial instruments, which are not included in the monitored scope of public finance. Surprising budgetary solutions appear, such as transferring Treasury securities instead of subsidies or pushing certain expenditures outside the state budget, to circumvent regulations and legally binding restrictions. In the context of parliamentary scrutiny, this means that a significant proportion of public debt is outside parliamentary control, and the scale of circumvention of the constitutional limit on public debt has been increasing for several years, reaching a considerable percentage of the GDP in 2021. This phenomenon is also accompanied by a record increase in public debt, fuelled by borrowing to finance tasks related to countering the Covid-19 pandemic and the socio-economic consequences of the war in Ukraine. It is, therefore, worth taking a closer look at the Polish government's budgetary solutions, which undoubtedly do not contribute to fostering transparency in budgetary policy. [ABSTRACT FROM AUTHOR]

Copyright of Informacion Comercial Espanola Revista de Economia is the property of S.G.E.E.I.P.C., Secretaria de Estado de Comercio, Ministerio de Industria, Comercio y Turismo and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Abstract This study questions the importance of public debt in stable growth between 1980 and 2018, specifically, the Ricardian equivalence hypothesis and Keynesian view are questioned. This study used data obtained from the Northern Cyprus State Planning Office. A restricted vector autoregressive model is used to test the causal relationships between this model and public debt, government expenditure, total capital, consumption, investment, employment, net exports, exchange rate, and gross domestic product growth rate. To ensure financial stability, the variables that trigger economic growth through increased interactions were evaluated. Accordingly, unlike other studies, the Wald test results reveal that public debt does not have a direct effect on the gross national product but indirectly affects total capital, consumption, investment, and public expenditure, all of which influence real gross domestic product (RGDP). It has been observed that employment affects RGDP, consumption, government spending, and investment. There is also bidirectional causality between consumption, government spending, and RGDP. The estimates of the Ricardian equivalent hypothesis are important. However, today's changing economic policies, declining real incomes, and consumer behavior in the face of ever-increasing inflation require that the theory be redesigned. Therefore, contrary to theoretical predictions, consumers are concerned about maintaining their standard of living rather than directing tax deductions to savings. Contrary to the claims of Keynesian researchers, no causal relationship is observed between public debt and growth in this study. However, public debt directly affects total capital, consumption, government spending, and investment, which are important for sustainable economic policy.

Public debt can attract funds to finance public needs and stabilize the country’s economic development. This study aims to analyze the relationship between public debt and economic development considering the war actions in Ukraine. This paper uses bibliometric analysis, comprising in-built Scopus and WoS instruments, VosViewer, and Google Trends tools. The overall results show the close relationship between public debt, economic development, and war (armed conflict) concepts. The publications were examined according to key features: containing the keywords from the green and red clusters; covering the period 2015–2018 and 2022; and discussing public debt in Central and South-Eastern Europe. This improved the theoretical and methodological approach to the bibliometric analysis of public debt. Moreover, the study identified risks (based on selected scientific publications) to which the primary attention should be paid during the war and post-war periods in Ukraine: currency and demographic risks. Key recommendations were provided to ensure debt security during the war and post-war periods. However, the given recommendations should be implemented within the framework of the Recovery Plan of Ukraine, which would improve the credit rating and reliability of the state.

We test sustainability of the Italian government deficit over the period 1861–2020 using the fiscal theory of the price level (FTPL). This approach takes into account monetary and fiscal policy interactions and assumes that fiscal policy may determine the price level even if monetary authorities pursue an inflation-targeting strategy. We consider a cointegrated model with multiple structural changes to characterize the sustainability of public finances and the prevalence of monetary or fiscal dominance during subperiods. We also use recursive unit root tests for explosiveness to test fiscal sustainability and to detect episodes of potential explosive behaviour in Italian public debt. We find two structural changes for the public debt and one change in the primary budget surplus, the alternation of monetary and fiscal dominant regimes, as well as evidence of bubbles related to three episodes of the Italian fiscal performance. Our results reveal the sensitiveness of the primary balance and the debt paths to shocks hitting fiscal, macroeconomic, and financial variables. [ABSTRACT FROM AUTHOR]

Copyright of Scientific Journal European Policies, Finance & Marketing / Polityki Europejskie, Finanse & Marketing is the property of Wydawnictwo SGGW and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

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The research aimed to test the relationship between the size of investment allocations in the agricultural sector in Iraq and their determinants using the Ordinary Least Squares (OLS) method compared to the Error Correction Model (ECM) approach. The time series data for the period from 1990 to 2021 was utilized. The analysis showed that the estimates obtained using the ECM were more accurate and significant than those obtained using the OLS method. Johansen's test indicated the presence of a long-term equilibrium relationship between the size of investment allocations and their determinants. The results of the Error Correction Model indicated a positive relationship between the size of investment allocations and the inflation rate, agricultural gross domestic product (GDP) and government revenues. On the other hand, there was a negative and significant relationship between the size of investment allocations and public debt, operational expenses, and investment expenditures in other economic sectors. The research recommends the necessity of balancing the distribution of investment allocations among different economic sectors based on scientific studies and the importance of each sector's impact on economic growth. This includes creating a suitable environment for domestic and foreign private investment, providing infrastructure to stimulate investment, reducing reliance on borrowing to finance public investments, diversifying sources of income. [ABSTRACT FROM AUTHOR]

Annually growing public debt of Latin American countries is a source of a consistent increase in regional crisis potential. The COVID-19 pandemic has exacerbated political instability and deepened socio-economic imbalances in the region. The chronic dependence on debt financing increases the region’s vulnerability to external shocks and makes it much more challenging to implement public policies to achieve the UN Sustainable Development Goals. The purpose of the article is to reveal the increasing nature of the debt risks inherent in the Latin American countries, and to propose measures to overcome them. The authors summarize the views of leading Russian and foreign experts on the debt sustainability of the region. Based on the statistical data of international organizations, regional development institutions, as well as analytical materials published by Bloomberg, Fitch, White Case or Deloitte, the authors analyze the approaches to solving the Latin American debt problem. However, considering recent debt dynamics, new public borrowings may cause a deterioration of the regional debt sustainability in the future. This issue reinforces the uncertainty in international investment circles regarding the future solvency of the Latin American region. The situation in the Latin American countries is exacerbated by the uncertainty whether positive rates of economic growth resume in the medium term that have been lost due to volatile global commodity prices. The study examines the prospects for regional economic stabilization in Latin America and the Caribbean, including through the use of new debt financing mechanisms to meet current financial needs and minimize the risks of financial vulnerability.

Amid rising global inflation, Japan, which has long struggled with deflation, is now witnessing increasing prices. Inflation and the appointment of a new Bank of Japan governor in April 2023 bring the future of its monetary policy into question. Changes in monetary policy could significantly impact the economy, particularly public finances, given Japan's high debt. The Bank of Japan must carefully observe market reactions to changes in monetary policy, while the government should aim to improve its fiscal situation. In the meantime, Japan must carefully consider the effectiveness and potential drawbacks of monetary and fiscal policies. [ABSTRACT FROM AUTHOR]

We assess public finances solvency for Euro Area countries, using quarterly data from 1999Q1 to 2020Q4. For most countries: (i) the primary budget balance reacts positively to the lagged debt-to-GDP ratio and past primary budget balances contribute to the reduction of the debt-to-GDP ratio, indicating a Ricardian fiscal regime. In the country-by-country analysis, we confirm (ii) the "elusive character of fiscal sustainability" (Afonso and Jalles, 2016). Furthermore, in a panel framework: (iii) the response of revenues to government expenditures is higher from 2010 onwards, whereas the response is lower for higher average debt-to-GDP ratios; (iv) the response of the primary budget balance to the lagged debt-to-GDP ratio is lower from 2010 onwards and is higher for higher average debt-to-GDP ratios; (v) past primary budget balances enable the reduction of the debt-to-GDP ratio, especially before 2010 and also in countries whose average debt-to-GDP ratio is between 60% and 90% of GDP. Using a rolling window method, we find that (vi) the higher the lagged debt-to-GDP ratios, fiscal rule indexes, and sovereign ratings, the greater are the fiscal sustainability coefficients. Conversely, (vii) those coefficients are lower both after 2010 and during periods of legislative elections. These results have important implications for public finances management and solvency. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to analyze the dynamics of the Spanish public debt–gross domestic product ratio during the period 1850–2020. Design/methodology/approach: This study uses a recent procedure to test for recurrent explosive behavior (Phillips et al., 2011; Phillips et al., 2015a, 2015b) to identify episodes of explosive public debt dynamics and also the episodes of fiscal adjustments over this long period. Findings: The identified episodes of explosive behavior of public debt coincided with fiscal stress events, whereas fiscal adjustments and changes in economic policies stabilized public finances after periods of explosive dynamics of public debt. Originality/value: The longer than usual span of the data should allow the authors to obtain some more robust results than in most of previous analyses of long-run sustainability. [ABSTRACT FROM AUTHOR]

In the face of crises like the COVID-19 pandemic, this article delves into the pressing need for governments to sustainably manage public finances amid economic and social turbulence. It underscores the pivotal role of fiscal sustainability during such periods of upheaval, emphasizing its significance in stabilizing budgets and fostering enduring economic recovery. By scrutinizing various fiscal strategies and policies, the article seeks to elucidate pathways towards maintaining budgetary stability while simultaneously facilitating sustainable growth. It highlights the importance of prudent financial management in navigating through tumultuous times, where the resilience and adaptability of public finances become paramount. Through an examination of effective fiscal measures, the article aims to provide insights into how governments can address immediate challenges while laying the groundwork for long-term fiscal sustainability. Ultimately, it advocates for a comprehensive approach to financial governance that prioritizes resilience and sustainability in times of crisis, thereby fortifying economies against future shocks. [ABSTRACT FROM AUTHOR]

Copyright of Cuadernos de Estudios del Siglo XVIII is the property of Instituto Feijoo de Estudios del Siglo XVIII (Universidad de Oviedo) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purpose: In light of the recent calls for another round of debt relief for African countries, by African finance ministers and governments, the aim of the study is twofold. First, the study examined the effect of public debt on macroeconomic performance. Two, the study also examined whether previous debt relief has impacted positively on sub-Saharan African economies. Design/methodology/approach: The study adopts the two-step system GMM that accounts for potential endogeneity and feedback effect in dynamic panel models. As robustness, the study performs the two-stage least square (2SLS) estimation method. Findings: The study reveals that previous debt relief programmes only had a marginal effect on economic growth in the region. The study found that corruption impacts negatively on the effectiveness of debt relief to achieve the desired economic outcomes. The study also found that sub-Saharan African economies seem to have shifted away from traditional concessional sources of financing towards market-based lenders dominated by China. Originality/value: The study adds to the growing evidence in the public debt literature by looking at the separate impact of domestic and foreign debts on macroeconomic indicators of economic growth, inflation, unemployment and exchange rate. The study also controlled for previous debt relief in light of the call for another round of debt relief. [ABSTRACT FROM AUTHOR]

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The debt overhang in the 1990s among African countries significantly constrained fiscal space and had a devastating effect on economic development. With the current rising levels of public debt, this study seeks to explore the factors that influence the ability of governments to honour their debt repayment obligations. The study used secondary data from the World Development Indicators and World Economic Outlook. The frequency of the data is annual from 1980 to 2019. The fixed and random effects panel data estimation technique was deployed. Deploying fixed and random panel data estimation techniques while controlling for other variables, the study shows that government gross debt and total investment have a positive influence on the ability to honour debt repayment obligations while government expenditure and current account balance have a negative influence. Prudent government expenditure, financing of productive public investment, and implementation of export‐oriented policies are recommended. [ABSTRACT FROM AUTHOR]

This study focuses on the sustainability of public finances in relation to economic growth in Morocco for the period from 1987 to 2019. We set out to explore therewith the non-linear relationship between government size, the level of fiscal discipline and economic growth. This issue at hand has attracted broad public interest and decision-makers' attention in Morocco, especially after the financial crisis of 2008 and during the COVID-19 pandemic. In order to determine government optimal size, we apply the Hansen's approach which postulates the coexistence of different fiscal regimes conditioned by the public debt, government expenditures, and tax revenues in the form of a non-linear inverted-U curve. These regimes are separated by an optimal threshold maximizing economic growth below which the impact is positive and above which the impact becomes negative, as the rising side of the curve is interpreted as consequence of higher taxes providing more resources for public investment, which in turn promotes growth. Once the economy reaches the slippery side of the curve, more taxes and excessive public debt become more distortionary and negatively correlated with economic growth. Our findings indicate that Morocco is relatively in a prudential fiscal stance with recessive effects on growth. [ABSTRACT FROM AUTHOR]

Sustainability gaps (S2 indicators) are frequently used in national and international reports to assess the sustainability of public finances. For instance, in the European Commission's Debt Sustainability Monitor (DSM) the indicators are analyzed in comparisons across (policy) scenarios, countries and time. The report's findings play a crucial role in the context of the Stability and Growth Pact and the European Semester. As a result, sustainability gaps have a significant indirect influence on policy decisions. In this paper, we analyze two non-transparent properties of these indicators. First, the response of these indicators to changes in the interest rate-growth (r-g) differential is not readily predictable in terms of both strength and direction. Second, in our examples for low values of r-g (in a range of 0.5%), highly uncertain projections for distant periods after 2070 explain about 80% of the indicators' values. To address these problems, we develop a new decomposition that takes into account the notion of premia (Reis 2021) and hence allows for a more transparent discussion of the sustainability of public debt. [ABSTRACT FROM AUTHOR]

The indicator that is commonly used to assess the long-term fiscal sustainability of public finances in EU member states ("S2") is also defined if government borrowing rates are assumed to be permanently lower than the growth rate of GDP. Under these circumstances, however, it no longer provides a reliable orientation for fiscal policy. I illustrate these findings based on simulations prepared for the Fifth Sustainability Report published by the German Federal Ministry of Finance. In addition, I discuss the interpretation of the indicator in a low-interest environment and the assumption that relevant interest rates may continue to be low if there are substantial challenges for fiscal sustainability, e.g., through demographic ageing. [ABSTRACT FROM AUTHOR]

Spending on public investment financed by debt is analyzed, considering the interaction between macroeconomic and fiscal variables to establish the intertemporal path of solvency and the conditions of fiscal compliance that determine a sustainable fiscal policy. Empirically, a response impulse function is proposed to analyze the dynamics situation of Mexican economy. The results show a positive response in the fiscal position resulting from the imposition of a fiscal rule of indebtedness to finance public investment, where the primary balance allows conditions of slack for the stimulation of economic activity. [ABSTRACT FROM AUTHOR]

Balance on the public debt market is a guarantee of the stability of public finances. The state of public debt and the country's debt security depend on the efficiency of the public debt market of any country. When determining the key determinants of the debt market state, indicators that take into account the macroeconomic conditions of the borrowing country should be taken into account. Therefore, the article focuses on relative indicators. In addition, it is worth taking into account not only the indicators contained in domestic regulations, but also international recommendations. Usually, international standards characterizing debt security are quite high. Compliance with such indicators is primarily important for countries with emerging markets, to which Ukraine belongs. And for highly developed countries, the key is compliance with solvency, not indicators and norms related to the size of the debt and its components. The key determinants of the Ukraine's public debt market state in the pre-war period were the definition and assessment of the following indicators: the ratio of state and guaranteed state debt to gross domestic product, the share of debt in foreign currency, the share of guaranteed debt, the share of external debt, the ratio of gross external debt to GDP and the ratio of official international reserves to external debt, an indicator of the ratio of debt repayment expenditures in relation to general budget expenditures, as well as the ratio of debt service expenditures in budget expenditures. All the analyzed indicators illustrate a permanent excess of the permissible norms, which are substantiated by scientists and recommended by international financial institutions. The high debt burden on the budget and the economy as a whole, caused by the State debt accumulated over the years, is extremely negative. The high level of expenses for maintenance and debt payment makes it necessary to reduce the total expenses of the state, which affects social or other components, or forces to expand fiscal sources and increase fiscal pressure. [ABSTRACT FROM AUTHOR]

Philip the Handsome, the first Habsburg king of Castile, ruled briefly, in tandem with his wife except for the final three months of his reign, from the death of Isabella I in November 1504 to his own demise in September 1506. The problems, but also the potential, of the dynastic union of Castile and the Burgundian Low Countries were clear from the time he took his oath as a prince in 1502. Castile's royal treasury, in a severe crisis from 1503, was to become, owing to its political importance and its role as a major source of revenue, a primary arena for these dynastic interactions. [ABSTRACT FROM AUTHOR]