Sustainability of public debt: a theoretical and empirical investigation

Albu, Lucian-Liviu and Pelinescu, Elena (2000): Sustainability of public debt: a theoretical and empirical investigation. Published in: Revue Roumaine des Sciences Economiques , Vol. 45, No. 1 : pp. 101-127.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: public debt; sustainability function; primary deficit; interest rate
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P27 - Performance and Prospects; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C15 - Statistical Simulation Methods: General; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; H - Public Economics > H6 - National Budget, Deficit, and Debt > H68 - Forecasts of Budgets, Deficits, and Debt

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