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Specific Aspects Of The Global Bubble Of Public Debt

Author

Listed:
  • LUCHIAN, Ivan

    (International Institute of Management IMI-NOVA, Chisinau, Republic of Moldova)

  • TEPORDEI, Aurelia

    (International Institute of Management IMI-NOVA, Chisinau, Republic of Moldova)

Abstract

Debts are a basic practice and a solution for any functional economy. Governments are lending money to finance projects such as roads, hospitals, schools and to fulfill promises on reducing taxes. The ratio of general public debt to GDP has increased in most states over the last 10 years. The governments of several states take advantage of the low level of the interest rate and collect the debts that inevitably become overwhelming. Under conditions of exaggeration, it becomes a factor of destabilizing financial situation within both the country and international financial market. Currently, we can talk about the formation of a financial bubble based on increasing government debt. Based on this, the existence and evolution of public debt bubble requires the correction of financial policies in developing countries in relation to systemic risk management in domestic financial market and in formulation and promotion of national debt management policy.

Suggested Citation

  • LUCHIAN, Ivan & TEPORDEI, Aurelia, 2019. "Specific Aspects Of The Global Bubble Of Public Debt," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 7(1), pages 62-70, October.
    • Handle: RePEc:vls:rojfme:v:7:y:2019:i:1:p:62-70
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    More about this item

    Keywords

    financial bubble; global debt; public debt; Gross Domestic Product;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • 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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