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Sustainability of public debt: a theoretical and empirical investigation

Author

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  • Albu, Lucian-Liviu
  • Pelinescu, Elena

Abstract

At the beginning of the transition period, the public debt in Romania was insignificant. However, during the following years, the accumulating process accelerated. Although the indebtedness degree continues to be smaller than registered levels in other European countries, more dangerous could be its accelerating trend in conditions of some not so very high-performing macroeconomic policy management. The present study attempts to answer certain problems related to the governing mechanism of the public debt accumulation. Particularly, it examines: a) some significant implications of the public sector deficits on the dynamics of the main macroeconomic indicators; b) certain factors having impact on sustainability degree; and c) possibilities for setting up fundamental parameters and a time horizon to stop the debt accumulation process. Certain plausible hypotheses will be selected and some likely evolutions will be simulated.

Suggested Citation

  • Albu, Lucian-Liviu & Pelinescu, Elena, 2000. "Sustainability of public debt: a theoretical and empirical investigation," MPRA Paper 14364, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:14364
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    References listed on IDEAS

    as
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    2. de Rezende Rocha, Roberto & Saldanha, Fernando, 1992. "Fiscal and quasi - fiscal deficits, nominal and real : measurement and policy issues," Policy Research Working Paper Series 919, The World Bank.
    3. Fetherston, Martin J. & Godley, Wynne A. H., 1978. ""New Cambridge" macroeconomics and global monetarism : Some issues in the conduct of U.K. economic policy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 9(1), pages 33-65, January.
    4. Wilcox, David W, 1989. "The Sustainability of Government Deficits: Implications of the Present-Value Borrowing Constraint," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(3), pages 291-306, August.
    5. Mr. Nigel A Chalk, 1998. "Fiscal Sustainability with Non-Renewable Resources," IMF Working Papers 1998/026, International Monetary Fund.
    6. Eisner, Robert, 1989. "Budget Deficits: Rhetoric and Reality," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 73-93, Spring.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    public debt; sustainability function; primary deficit; interest rate;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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