Off-Budgetary Reasons of the Growing Public Indebtedness
AbstractThe interpretation of the relation between a budget deficit and a government debt in the standard economic theory is based on its unilateral causality, where the government debt comes into being due to the accumulation of budget deficits. The logic of the development of the government indebtedness is, in this approach, unambiguously determined by public finance processes monitored by Parliament in the framework of the course of fiscal years. The main objective of this paper is to stress that in reality the development of government indebtedness is significantly influenced by off-budgetary factors. The presented results endorse the hypothesis that the influence of stock-flow adjustment on the development of the debt/GDP ratio in a number of cases surpasses the influence of the budget balance. This trend significantly amplifies in the period of a financial crisis in context of the massive shift of the debt burden, occurring in the course of them.
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Bibliographic InfoArticle provided by University of Economics, Prague in its journal Politická ekonomie.
Volume (Year): 2010 (2010)
Issue (Month): 4 ()
Postal: Redakce Politické ekonomie, Vysoká škola ekonomická, nám. W. Churchilla 4, 130 67 Praha 3
Find related papers by JEL classification:
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
- H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
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- Marco Buti & Jo�o Nogueira Martins & Alessandro Turrini, 2007.
"From Deficits to Debt and Back: Political Incentives under Numerical Fiscal Rules,"
CESifo Economic Studies,
CESifo, vol. 53(1), pages 115-152, March.
- Buti, Marco & Martins, Joao Nogueira & Turrini, Alessandro Antonio, 2006. "From Deficits to Debt and Back: Political Incentives under Numerical Fiscal Rules," CEPR Discussion Papers 5809, C.E.P.R. Discussion Papers.
- Fabrizio Balassone & Daniele Franco & Stefania Zotteri, 2007. "The Reliability of EMU FIscal Indicators: Risks and Safeguards," Temi di discussione (Economic working papers) 633, Bank of Italy, Economic Research and International Relations Area.
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