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Debt Dynamics under Uncertainty: Evidence from the Republic of Moldova

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  • Olesea Speian

Abstract

Public debt management plays a pivotal role in ensuring fiscal stability and fostering economic growth, particularly amidst unprecedented challenges like the COVID-19 pandemic and energy crises. The main aim of this study is to provide accurate projections for public debt, offering valuable insights to guide sustainable debt management practices. Utilizing historical data from the Republic of Moldova spanning the period 2003-2023, the study employs the Monte Carlo simulation method to construct a fan chart. This chart presents a probability distribution of the general government debt-to-GDP ratio for the Republic of Moldova during 2023-2027. By generating multiple alternative scenarios for real GDP growth, real interest rates, and primary balances, policymakers can gain a comprehensive understanding of future debt trajectories and potential impacts of various policy decisions. These projections are essential tools to facilitate informed decision-making and promote effective debt management strategies in the face of economic uncertainties and challenges.

Suggested Citation

  • Olesea Speian, 2024. "Debt Dynamics under Uncertainty: Evidence from the Republic of Moldova," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 50-63.
    • Handle: RePEc:bas:econst:y:2024:i:2:p:50-63
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    More about this item

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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