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AbstractThe rapid public debt decrease at the end of World War II is regularly analysed as being the result of inflationary policies initiated by governments. This policy is said to be based on economic thinking that is less virulent towards inflation than during the interwar period. This article seeks to question this view by presenting a relatively unknown debate among French economists. By highlighting out two confidential studies made by the Institut de conjoncture, it shows that a minority of French economists developed a framework in which the call for inflation to reduce debt is well founded. [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]

Digital infrastructure has the potential to help achieve global carbon neutrality by promoting the use of renewable energy (RE) in economic operations. Therefore, it aids in the growth of a sustainable economy and society. Digital infrastructure and efficient budget allocation are the determinants of a modern and digital society. In this context, public debt plays an important role if it is invested in digital infrastructure projects. Taking this into account, we examine the relationship between carbon (CO2) emissions and digital infrastructure moderated by public debt in G20 countries for the period 2003–2021. The study employed advanced econometric techniques for panel data that are robust to solving the problem of cross-sectional dependency. As a result, cross-sectionally augmented autoregressive distributed lag (CS-ARDL) estimation technique was employed. The results indicate that digital infrastructure has a negative impact on CO2 emissions. Conversely, we find that public debt has a positive impact on CO2 emissions. Furthermore, the study confirms that the interaction between digital infrastructure and public debt has a negative effect on CO2 emissions. This implies that public debt, if used in digital infrastructure projects, leads to a decrease in CO2 emissions. To reduce CO2 emissions, it is recommended that G20 nations give priority to upgrading digital infrastructure while maintaining a manageable level of public debt. [ABSTRACT FROM AUTHOR]

Employing a two-period model with an environmental externality, this paper investigates the relation between emission taxation and the optimal level of public debt. The central insight is that the effect of emission taxation on optimal borrowing is ambiguous and may lead to lower or higher optimal debt. In the context of climate change, we even show that the counterintuitive result of a higher optimal debt level is likely in the short-run and possibly also in the long-run, a result that provides a novel rationale for public borrowing. Our basic arguments turn out to be robust against several generalization. [ABSTRACT FROM AUTHOR]

In current environment, external borrowings have a significant impact on the domestic economy. On the one hand, they are an important tool for the development and stabilisation of Ukraine's economy, as, if used rationally, they will help maintain budgetary stability and implement the necessary reforms. On the other hand, such borrowings may pose certain risks in the form of an increased debt burden, dependence on creditors, and even a threat to financial independence. For Ukraine, this issue is of particular relevance. Sources of external borrowing include various entities, including: The International Monetary Fund (IMF), the European Bank for Reconstruction and Development (EBRD), the World Bank, individual states, etc. The overarching processes of globalisation are leading to an increase in the economic and political interdependence of states. The presence of external debts affects not only the economic component but also the social sphere. In recent years, Ukraine has been experiencing an upward trend in its external debt. External debt affects debt security, and thus economic and national security in general. The main reasons for the emergence and growth of Ukraine's public debt include the state budget and balance of payments deficit. Yes, borrowing is tangible and helps to balance the state budget, but it should be noted that this is a temporary measure. In the future, constant borrowing will only increase the debt burden. This leads to negative consequences for the population, in particular in terms of increased taxation. It should be noted that external debt requires repayment, which means regular payments from the budget. The need for such payments causes a shortage of funds for the country's development and a reduction in funding for relevant government programmes. This suggests that a rational plan for repayment should be developed to minimise the impact of negative consequences on the financing of state development. In addition, the use of borrowed funds should be strictly controlled and used exclusively for the necessary needs. Debt repayment will help create conditions for economic growth, restore confidence in the financial system, attract foreign investment, etc. [ABSTRACT FROM AUTHOR]

The issue of public and private debt has become one of the central themes in global economics and finance, especially in the context of the recent economic crisis and the expansion of financial markets. This paper brings together the findings of cerebral studies that explore the combined impact of public and private debt on economic growth with the focus on their interdependence as well as the implications for macroeconomic policies. Paper highlights how these types of debt influence each other and contribute to the financial stability or instability of both developed and emerging economies. Over the past decades, debt accumulation has become a key driver for economic development supporting investment in infrastructure and innovation. However these benefits come with significant risk, particularly when the level of indebtedness exceeds certain critical thresholds. Public debt is generally used to finance long-term projects and stimulate the economy during recessions, and private debt which contributes to consumption and private sector development are not easily isolated from one another. These two forms of debt interact in ways that can generate both positive synergies and amplify the negative effects. This paper brings together the conclusions of several studies that explore the combined impact of public and private debt on economic growth focusing on their interdependence and the implications for macroeconomic policies. Throughout the analysis of various perspectives ranging from critical debt thresholds to spillover effects between regions, the paper aims to provide the number of how that can become a systemic risk factor. Moreover, it explores the relationship between sovereign debt and the financial sector which can amplify vulnerabilities during crisis periods and presents the policies needed to manage these risks.

This paper aims to assess the compliance of the EU Member States with the previous debt rules over the period 2011-2023. To achieve this, we assessed two complementary criteria concerning public debt, respectively the compliance with the 60% of GDP threshold and the one related to the debt reduction rule, which indicates that Member States with public debt levels higher than 60% of GDP should reduce the difference between the level of public debt share in GDP and the 60% of GDP threshold with an average rate of 1/20 in the last three years. Further, we highlighted the reasons why the last economic governance framework was not effective and we presented the new debt rules in their revised form.

The purpose of this study was to present a systematic literature review on the public debt-economic growth nexus. The objective was to provide policymakers and researchers with significant insights on the impact of public debt on economic growth and to provide reliable evidence on the gaps in the literature that require their urgent attention. The study used a systematic review of the literature contained in two databases, namely Semantic Scholar and Google Scholar. The study shows that public debt above the threshold is detrimental to economic growth, while low public debt is conducive to growth, and that the degree of non-linearity in the debt-growth relationship varies considerably depending on the economic status and debt burden of the country. Policymakers in each country should identify the tipping point at which further public debt begins to impede growth. Debt policy should take into account not only fiscal constraints, but also the effectiveness of governance and the possible consequences of eroding public confidence. The study also shows that institutional quality, public investment, production expenditure, foreign direct investment and exports are among the variables that significantly affect the relationship between public debt and economic growth. Policymakers should control the level of public debt and its drivers to support longer-term economic growth. The study also recommends that countries account for public debt and ensure that such debt is acquired only to finance profitable investments that generate future returns, and not for consumption, deficit reduction, wasteful spending, or political purposes.

This article investigates the link between board members' past professional experiences and the terms and conditions of the debt contracts of their current firms. In particular, we examine whether directors' past bankruptcy experience affects the pricing and nonpricing terms of public debt contracts. Using a sample of 8,142 bond issues in the United States in the period 1995 to 2015, we document higher credit spreads and smaller bond sizes for firms with such directors, suggesting that bondholders are concerned about past bankruptcy experience. Our results remain robust to different model specifications. This effect is moderated for bankruptcies that are likely driven by macroeconomic shocks such as the dotcom bubble and the global financial crisis. We also show that our findings are not explained by bond issuers with an elevated risk of default and seem instead to be driven by directors serving on key monitoring committees, indicating that prior bankruptcy experience raises concerns about the company's corporate governance. Finally, mediation analysis offers some evidence of a limited negative indirect effect of prior bankruptcy experience on the terms of debt contracts through the firm's financial and investment policies. Overall, our findings suggest that lenders incorporate information about past professional experiences of directors into public debt contracting. [ABSTRACT FROM AUTHOR]

The rapid growth of public debt in developing countries in recent years and the increasing risks associated with this process emphasize the importance of research in this area. The article examines one of the key aspects of public debt management — the structure of creditors’ debt portfolio. The object of the study is the public debt of four countries of Central Asia and three countries of the South Caucasus. The states of this region are important foreign economic partners of Russia, their contribution to mutual trade and realization of joint projects is growing. Their role in the global and regional economy is also expanding, including participation in major transport and logistics projects designed to increase the connectivity of Eurasia. The study is based on the data of international organizations on the total volume of public debt, debt to individual external creditors and the dynamics of macroeconomic indicators. The article examines changes in the structure of the main groups of creditors for each country over three long-term periods and analyzes similarities and differences in the observed structural shifts. It also decomposes the indicator of public debt dynamics and estimates the contribution of the economic growth factor and the effects of changes in countries’ debt to certain groups of creditors. The study identified the following key trends in public debt structural changes: 1) the declining role of bilateral loans from developed and developing countries since the 2000s; 2) the continued strong influence of debt raised from international financial organizations and development banks in most countries throughout the period under study; 3) in a number of countries, a gradual increase in market sources of debt financing (domestic and Eurobonds); the increasing role of loans from China — in the Kyrgyz Republic and the Republic of Tajikistan, etc. The study identifies reasons for these structural changes, and concludes with a discussion of the risks associated with the observed shifts in the structure of public debt.

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.

Abstract Fiscal rules are argued to be important for sound and sustainable fiscal policies and have been increasingly adopted over the last 20 years. As increased fiscal pressure and fiscal risks urge countries to address the public debt legacy left by recent economic crises, fiscal rules come under greater scrutiny. To inform the debate on fiscal frameworks, this paper presents a comprehensive survey of the empirical literature on the impact of fiscal rules. In particular, we discuss the recent empirical literature that investigates the impact of fiscal rules on various elements related to fiscal performance and beyond. Our survey finds that fiscal rules are associated with improved fiscal performance as approximated by improved budget balances, lower debt and lower public spending volatility. Furthermore, empirical research finds that fiscal rules are related to more accurate budget forecasts and improved sovereign bond ratings. From a macroeconomic perspective, well-designed fiscal rules do not principally undermine public investment, do not increase pro-cyclicality in fiscal policy-making and can support fiscal consolidations. These results, however, also depend on the broader economic and institutional context. Moreover, there is emerging literature that links fiscal rules to macroeconomic and broader political outcomes, such as income inequality and political polarisation. We discuss methodological challenges related to identification and point to avenues for future research.

The budget deficit is a quasi-generalized constant of the contemporary world. Like any fundamental concept, it has been the subject of study in various schools of economic thought and thus its content has been reconsidered over time. In our analysis we aim to provide a diagnosis of the budget balance over the period and of the factors having an impact on its structure and effects, with a view to capturing the process in both static and dynamic terms. Finally, we hope to formulate some conclusions and projections on the effects of the budget deficit on the national economy,

This article estimates the impact of the level of regional public debt on the rate of regional economic growth in the context of socio-economic development of Russian regions. The results obtained are important for determining the optimal level of regional public debt in order to increase the efficiency of the Russian regional budget policy. The level of regional public debt is understood in this study as the ratio of regional public debt to its GRP. Considering the heterogeneity of regions in the modeling process, the subjects were clustered by the level of socio-economic development using the k-means algorithm. Further, the results of clustering were used in econometric models to identify differences in the level of regional public debt impact on the economic growth of regions depending on the level of their socio-economic development. Using panel data models for the subjects of the Russian Federation, the negative impact of the public debt level on regional economic growth rates was revealed for regions with a low and medium levels of socio-economic development. By implementing the Hansen procedure for the subjects of these clusters, the threshold level of regional public debt was found. It is equal to 2.36% of GRP, above which the neutral impact of public debt on economic growth is replaced by a negative one. For regions with a high level of socio-economic development it was found that changes in the level of public debt are neutral in relation to regional economic growth. These results allowed us to formulate recommendations for regional budget policy.

This study aims to investigate the direction of causality between income inequality and growth, income inequality and debt, and debt and growth for 11 selected countries in SSA countries (Botswana, Ghana, Kenya, Lesotho, Malawi, Nigeria, Rwanda, South Africa, Tanzania, Uganda, and Zambia). The panel bootstrap causality approach is applied to these countries from 1980 to 2018. Inequality is represented using Gini coefficient, Palma ratio, and Theil index. The findings show that there is at least a one-way causal relationship between public debt and inequality in Botswana, Ghana, Kenya, Malawi, Nigeria, Rwanda, South Africa, Tanzania, and Uganda, between inequality and growth in Botswana, Lesotho, Nigeria, and South Africa and between growth and debt in Botswana, Rwanda, South Africa, and Uganda. Empirical results imply that the relations between the relevant variables in the Sub-Saharan African countries may vary according to the specific characteristics of these countries. To the best of our knowledge, this is the first paper to analyse the impact of these three macroeconomic variables together. [ABSTRACT FROM AUTHOR]

This study aims to investigate the direction of causality between income inequality and growth, income inequality and debt, and debt and growth for 11 selected countries in SSA countries (Botswana, Ghana, Kenya, Lesotho, Malawi, Nigeria, Rwanda, South Africa, Tanzania, Uganda, and Zambia). The panel bootstrap causality approach is applied to these countries from 1980 to 2018. Inequality is represented using Gini coefficient, Palma ratio, and Theil index. The findings show that there is at least a one-way causal relationship between public debt and inequality in Botswana, Ghana, Kenya, Malawi, Nigeria, Rwanda, South Africa, Tanzania, and Uganda, between inequality and growth in Botswana, Lesotho, Nigeria, and South Africa and between growth and debt in Botswana, Rwanda, South Africa, and Uganda. Empirical results imply that the relations between the relevant variables in the Sub-Saharan African countries may vary according to the specific characteristics of these countries. To the best of our knowledge, this is the first paper to analyse the impact of these three macroeconomic variables together. [ABSTRACT FROM AUTHOR]

This study examines the impact of public debt on economic growth and the debt threshold in selected indebted economies from 1990 to 2021. We employ several econometric methods: the cross-sectional autoregressive distributed lag model and the dynamic panel threshold model, which allow for common correlated effects, to analyse the short- and long-term impacts of debt on growth. Additionally, we explore the effects of changes in public debt using the panel CSARDL method. Our findings reveal that the square term of debt is negative and significant, indicating that an increase in public debt is negatively associated with long-term growth. The debt threshold is calculated to be 56% of GDP, beyond which it adversely affects growth. The negative and significant error correction term (ECT) suggests that the model converges to a long-run equilibrium path. Finally, this study recommends that policymakers in highly indebted countries focus more on resolving debt issues and effectively utilising public debts and borrowings in productive ways, as these factors significantly impact the economic growth of the countries under study. [ABSTRACT FROM AUTHOR]

Copyright of Omer Halisdemir Universitesi Iktisadi ve Idari Bilimler Fakültesi Dergisi is the property of Omer Halisdemir University, Faculty of Economics & Admistrative Sciene 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.)

The paper investigates whether public debt explains income inequality in several Sub-Saharan African (SSA) countries. The core method employed is the Bayesian Model Averaging (BMA) estimator, which uses a dataset covering the period 1997–2019. The key findings reveal that public debt tends to reduce inequality among the poor but may harm the rich in the WAEMU region. Public debt generally has a neutral impact on inequality in EMCCA but can improve income distribution among the rich under stringent corruption control. In terms of contributions, the paper is one of the first works that examine how public debt impacts inequality in the Sub-Saharan African (SSA) countries across different levels of income. Moreover, it explores the intricate relationship among public debt, socio-economic characteristics, corruption, and inequality within the region. [ABSTRACT FROM AUTHOR]

Fiscal rules are argued to be important for sound and sustainable fiscal policies and have been increasingly adopted over the last 20 years. As increased fiscal pressure and fiscal risks urge countries to address the public debt legacy left by recent economic crises, fiscal rules come under greater scrutiny. To inform the debate on fiscal frameworks, this paper presents a comprehensive survey of the empirical literature on the impact of fiscal rules. In particular, we discuss the recent empirical literature that investigates the impact of fiscal rules on various elements related to fiscal performance and beyond. Our survey finds that fiscal rules are associated with improved fiscal performance as approximated by improved budget balances, lower debt and lower public spending volatility. Furthermore, empirical research finds that fiscal rules are related to more accurate budget forecasts and improved sovereign bond ratings. From a macroeconomic perspective, well-designed fiscal rules do not principally undermine public investment, do not increase pro-cyclicality in fiscal policy-making and can support fiscal consolidations. These results, however, also depend on the broader economic and institutional context. Moreover, there is emerging literature that links fiscal rules to macroeconomic and broader political outcomes, such as income inequality and political polarisation. We discuss methodological challenges related to identification and point to avenues for future research. [ABSTRACT FROM AUTHOR]

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]

Since the 2008 financial crisis, public debt sustainability has been a major topic in economic discussions. With the added strains of the COVID-19 pandemic and ongoing global conflicts, the conversation around managing and maintaining public debt has only intensified. In the paper, we study governments' reactions to the accumulation of debt from Romania, using annual data from 2000 to 2023. The empirical approach applied in the paper include time series estimations using penalized spline regression. We use a semi-parametric model with time-varying coefficients and we include in the model some control variables which are particularly relevant in the case of Romania. [ABSTRACT FROM AUTHOR]

This study employs a dynamic stochastic general equilibrium (DSGE) model, integrated with a Susceptible‐Infected‐Recovered (SIR) epidemiological framework, to assess the macroeconomic impacts of fiscal policy during the COVID‐19 pandemic in Morocco. Calibrated with Moroccan COVID‐19 data, the model links epidemiological dynamics to macroeconomic variables, offering a detailed analysis of fiscal interventions. The primary objective is to evaluate the effectiveness of various fiscal measures, including government spending shocks, consumption tax cuts, and labor tax reductions, in stimulating economic activity and supporting households and businesses impacted by the pandemic. The results indicate that government spending shocks significantly stimulated economic activity and employment, but also led to increased public debt and inflationary pressures, thereby illustrating the inherent trade‐offs. Consumption tax cuts, intended to boost demand, had mixed effects on inflation; while prices for some goods declined, higher demand caused price increases in others. Labor tax reductions, aimed at enhancing employment, generated varied effects on labor supply and contributed to rising public debt due to lower tax revenues. The study underscores the necessity of balanced fiscal strategies to achieve both immediate economic recovery and long‐term fiscal sustainability, highlighting the critical role of well‐calibrated fiscal policies in mitigating the economic consequences of pandemics. [ABSTRACT FROM AUTHOR]

The issue of reverse causality between public debt and inflation has regained the center stage among policymakers and academicians amid rising pubic debt ratios and inflationary pressures, particularly in developing countries. This study, thus, aims to examine the causality between public debt and inflation in a sample of 39 developing countries over the period 1990-2020. Employing panel granger causality test, results of the study show that inflation granger causes public debt in developing countries. Splitting the sample as lower middle-income economies and upper middle-income economies, the study finds bidirectional causality between public debt and inflation; that is, public debt and inflation in fact reinforces each other over the sampled years. Segregation of the public debt and inflation as high vs low, the study finds that public debt is inflationary in the whole sample and upper middle-income economies. However, the study notes that while low inflation granger causes public debt in the whole sample and lower middle-income economies, there exists bidirectional in the upper middle-income economies. The benchmark results remain unaltered in robustness check exercise. The study has important policy implications for the sampled developing countries in terms of public debt management, achieving stable inflation and sustained economic growth. [ABSTRACT FROM AUTHOR]

This paper examines the possible nonlinear relationship between public debt and income inequality. The literature extensively examines the non-linear growth effects of public debt, whereas its inequality effects are not investigated sufficiently. Public debt can be used to finance distributive policies, thereby improving income equality. However, high public debt levels can also harm economic growth and decrease the fiscal space due to sustainability concerns, high risk premia, and large debt service burden. Hence, it is possible that public debt can have non-linear effects on inequality. The empirical analysis documents that the relationship between public debt and inequality is positive with a declining marginal effect in the case of advanced countries. However, developing countries display a U-shape relationship, implying that public debt is initially associated with declines in inequality, while higher levels of debt are associated with higher levels of inequality. The analysis also shows that the determinants of inequality can differ greatly between advanced and developing countries. [ABSTRACT FROM AUTHOR]

We examine ways to describe the maturity structure of public debts using few parameters. We compile a novel data set of all promised future payments for U.S. and UK government debt from every month since 1869, and more recently for Peru, Poland, Egypt, and Nigeria. We show there is a unique parametric form which does not arbitrarily restrict debt issuance. We use this model to parsimoniously describe the evolution of public debt maturities and to characterize the relationship between maturity and the term structure of interest rates in the United States since 1940. [ABSTRACT FROM AUTHOR]

We present an open economy growth model incorporating various elements of fiscal policy, including government expenditure on education and public capital (infrastructure), budget deficit, internal and external public debt, public consumption, and four tax rates. This detailed description of fiscal policy allows for a systematic study of the relationship between fiscal policy and economic growth. We derive the balanced growth path and analyze its properties, including existence, uniqueness, and stability. The theoretical results are supported by numerical simulations for Poland, with the model calibrated based on data from the years 2010 to 2019. In the baseline scenario, the GDP growth rate converges to 3.98%. However, through appropriate adjustments to fiscal policy, economic growth can be significantly accelerated. Notably, increasing spending on both education and public infrastructure proves to be the most effective way to permanently boost economic growth, even if it requires raising taxes on consumption or increasing public debt. [ABSTRACT FROM AUTHOR]

The study gives new evidence on the effects of public debt on economic growth in India with key macroeconomic indicators from 1980 to 2019. In the past decade, and after the COVID-19 pandemic, there is a substantial rise in public debt, which reached 90% of the GDP in April 2021. Therefore, it is imperative to study the impact of different public debt sources on the Indian economy to help policymakers frame informed debt management policies. The long-run equilibrium relationship and cointegrating coefficients are calculated using Johansen cointegration and fully modified ordinary least square techniques. Toda and Yamamoto's (1995) Granger causality test is used as a short-run diagnostic test for the long-run equilibrium relationship. The study's major findings suggest that domestic debt, total factor productivity (TFP) and exports are the major determinants of economic development in the long run. In contrast, economic prosperity determines the growth of external debt, debt service payments and TFP in the short run. It is recommended that the government should control and channel public debt productively for favourable growth effects. [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 article is devoted to highlighting the results of research aimed at improving existing approaches to conducting a comprehensive analysis of the nature of the relationships between the parameters of the state's monetary and debt policy. Among other things, such indicators as the size of the domestic public debt, the size of international reserves, the level of inflation, the exchange rate and the discount rate are taken into account. The proposed approach to the analysis of the influence of managed monetary indicators on the size of the internal state debt proved that the use of the ARDL model gives slightly better results than the VECM in terms of the adequacy of the description and forecasting of the studied process. At the same time, both models proved their ability to describe the change in the size of the internal state debt, and have high values of coefficients of determination and low values of the indicator of the average absolute percentage error. In the future, it is recommended to use it for the analysis of the causality of the influence, discriminant analysis and the expediency of changing monetary instruments independently of other instruments. On the basis of the developed models, the results were obtained, which allow us to draw conclusions that the system continues to remain stable after fluctuations of key factors capable of destabilizing it and will be able to return to its previous state after a shock for some time. This is confirmed by the fact that, on the basis of statistical tests, the existence of a long-term relationship between the investigated indicators and the impulse response function together with the decomposition of the variance of the VAR model was proved. [ABSTRACT FROM AUTHOR]

Copyright of Revista de Historia Económica / Journal of Iberian & Latin American Economic History is the property of Cambridge University Press 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.)

This study investigated the impact of public debt on insecurity in Nigeria. In the analysis, the study also sought to estimate how poverty, unemployment and level of education can affect insecurity in Nigeria. The study however, used annual time-series data covering the period from 1982-2023 using Autoregressive Distributed Lag Model (ARDL) as technique of data analysis. From the econometrics results the study revealed that unemployment, poverty have a significant positive influence on insecurity in Nigeria. Further, public debt and level of education also have a significant positive effect on insecurity in Nigeria over the sampled period. Based on the results, the study recommended that government should tackle corruption in the defense sector this is because the correlation between corruption and insecurity is positive. The need to provide and improve education and job opportunities to teaming graduates should also be prioritized. With access to quality education and job opportunities youth and fresh graduates will be able to lead production lives and make positive contribution. [ABSTRACT FROM AUTHOR]

The COVID-19 pandemic has exacerbated the local debt in Spanish municipalities with negative consequences on the macroeconomic financial stability at national and eurozone level. The main objective is to identify the causes of public debt per capita in four groups of Spanish municipalities according to size. It is based on a quantitative analysis based on correlational and causal-comparative approaches. It consists in the construction of panel quantile regressions (MMQ) and mean group (ME) estimators to explain public debt per capita in Spanish municipalities. Moreover, the Juodis test for causality analysis in panel data is applied. The research is constructed around various types of potential determinants related to economic factors (GDP per capita and unemployment rate), demographic factors (population under 15 and population over 65), and political factors (political party, ideology, and political strength). The results based on MMQR for the period 2011–2020 indicate common factors that reduce local debt (short-run economic growth), but also differences between clusters in what concerns factors that increase or decrease the debt. The Juodis et al. (2021) test shows that growth and unemployment are factors that influence the level of public debt in all groups of municipalities except one (5001–20,000 inhabitants) where political party affects debt. These empirical findings support policy proposals to reduce the local debt in Spanish municipalities. The main initiatives to reduce debt should be based on the promotion of economic growth and creation of new jobs, especially for young people. [ABSTRACT FROM AUTHOR]

The Central Bank of Somalia faces challenges in implementing effective monetary policies due to limited authority over the nation's monetary system and the incomplete development of the banking industry. This constraint may impede the bank's ability to regulate inflation effectively. Nevertheless, this paper investigates the asymmetric impacts of inflation on public debt sustainability in Somalia from 1977 to 2021. This research employs a Nonlinear Autoregression Distributed Lag (NARDL) model. The research explores how inflation impacts changes in public debt and uncovers potential nonlinearities or threshold effects within this dynamic association. Findings reveal asymmetric effects of inflation on public debt, indicating that inflation's increase positively influences public debt while its decrease adversely impacts it. Additionally, foreign direct investment exhibits a negative long-term correlation with inflation, and GDP shows a positive yet statistically insignificant connection with inflation in the long run. The study underscores the significance of prudent debt management practices and advocates caution when accumulating public debt, especially during periods of heightened inflation. Moreover, this study highlights the implications for governments in Somalia and similar economies facing analogous challenges. It emphasizes the importance of accounting for inflation's impact on public debt dynamics and advocates strategies to control inflation to mitigate the risks associated with rising public debt. The study supports the presence of asymmetrical effects between these variables, enriching theoretical frameworks. Despite, acknowledging limitations, such as temporal constraints and model assumptions, the study recommends future research employ more sophisticated methodologies, extend sequential scope, integrate qualitative approaches, explore policy interventions, and enhance data collection mechanisms for a more comprehensive analysis. Moreover, based on the study outcomes, policy recommendations proposed to enhance fiscal stability. These include implementing measures to curb inflation rates, prioritizing prudent debt management, strengthening fiscal responsibility, enhancing monetary policy's role in inflation management, diversifying investments, improving data monitoring, and focusing on long-term economic planning. [ABSTRACT FROM AUTHOR]

The study investigated the moderating role of public indebtedness on the relationship between per capita income and government healthcare financing in Sub-Saharan Africa (SSA). Based on panel data for 35 SSA countries over the period 2010 – 2020, the panel quantile Autoregressive Distributed Lag (ARDL) model with dynamic fixed effects was applied. Robustness analysis was performed using the panel Fully Modified Ordinary Least Squares (FMOLS) approach. It was established that income per capita positively influenced per capita government health spending while the debt burden had a negative effect. The coefficient for the interaction term was negative and significant, affirming the hypothesis that indebtedness distorts the positive impact of per capita income on government healthcare financing. To mitigate the adverse effects of indebtedness on healthcare financing, there is a need for SSA countries to maintain public debt at appropriate levels and allocate borrowed funds to projects that stimulate economic growth.

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.

This study investigates the dynamic effects of public debt on economic growth in Ethiopia using annual data from 1980 to 2021. The results from the Autoregressive Distributed Lag (ARDL) modeling approach reveal that while public debt boosts investment and enhances growth in the short term, it hinders long-term growth. Additionally, debt servicing negatively impacts growth in both the short and long term by diverting vital resources from investment. Thus, public debt acts as a two-edged sword for Ethiopia’s economic growth. On one side, it finances infrastructure and other growth-stimulating projects; on the other, high debt levels can impede growth. To mitigate the adverse impacts of public debt, Ethiopia should implement prudent fiscal discipline, mobilize domestic revenue, manage debt efficiently, address its structural trade deficit, and prioritize needs to prevent misuse and corruption. This approach should also prioritize social spending and public investment while strategically transitioning from debt dependence.

Though studies abound on the relationship between public debt and other macroeconomic variables, research on the effects of public debt on government infrastructure investment, particularly in Ghana has not received much scholarly attention. Therefore, this relationship is explored in this study by using the Non-linear Autoregressive Distributed Lagged (NARDL) model for an annual dataset from 1983 to 2020. The findings indicate a positive correlation between foreign debt and infrastructure investments in both the short-run and the long-run suggesting that foreign debt have more significant impact on public infrastructure investment than domestic debt, highlighting the crucial role of foreign debt in financing Ghana’s infrastructure investments. In the long-run, the study finds a positive asymmetric link between foreign debt and public infrastructure. In particular, a rise in public infrastructure investment by 3.1% increases external debt by 1.3% as foreign debt has a higher effect on public infrastructure investment in the long term. Additionally, public expenditure has a positive effect on public infrastructure investment in the long run whereby a 1% increase in public spending leads to 2.06% rise in public infrastructure investments. The study further identifies a positive asymmetric impact of public debt on public infrastructure investment in Ghana. For policy purposes, the study suggests that government directs public debts to economic projects through capital formation, rather than for consumption purposes. It further advocates for prudent debt management by investing more in capital projects to enhance production and good returns.

AbstractIn recent years Ghana is challenged with rising debt, surging inflation, and unfavorable unemployment rates. To mitigate their impact on economic prosperity the country requires strategic policy interventions. Using data from 1990 to 2022, this study attempts to analyze the relationship between inflation, public debt, and unemployment in Ghana. The ARDL framework was used to estimate the variables. A long-run relationship between public debt and inflation was established. Notably, inflation correlates negatively with public debt in both short and long -run. Whiles public debt demonstrated a positive correlation with unemployment in both short and long-run, remittances displayed a negative long-run correlation with unemployment. The study suggests that prioritizing domestic debts over foreign debts could be strategic to hedge against inflationary risk. Moreover, we recommend a targeted investment in infrastructure projects and the promotion of agriculture. These initiatives will spur economic growth, engender sustainable development and ultimately create more job opportunities.

AbstractThis study examined the effect of public debt on macroeconomic stability among 45 sub-Saharan African (SSA) countries for the period 2005–2022 using the two-step system Generalized Method of Moments (GMM). The study disaggregated public debt into domestic and foreign borrowing and determined the effect of each on inflation and economic growth. In agreement with recent studies, we found compelling evidence of negative effect of both domestic and foreign borrowing on economic growth and a positive effect on inflation among SSA countries. The empirical results reveal that a unit increase in domestic borrowing reduces economic growth by 0.06 percent and raises inflation by about 0.14 percent, while the same increase in foreign borrowing reduces economic growth by 0.01 percent and increases inflation by 0.05 percent holding other factors constant. These results imply that increase in public debt causes macroeconomic instability, and that domestic borrowing has a relatively larger impact on macroeconomic variables compared to foreign borrowing. The policy implication of the current study is that SSA countries should avoid excessive borrowing by operating a fiscal deficit within individual country threshold limits to contain growth in public debt. The SSA countries should also ensure borrowed funds are channeled into projects that bring revenue and other investment opportunities to amortize the debt stock.