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The sustainability of public debt in Romania in economic and financial crisis

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  • Marian Dobranschi

Abstract

Public finances are key driver in the EU for economic recovery as the debth of the recession and credit constraints require fiscal policy action. This paper emphasis the needed review of public debt and its role in economic development as a particular challenge for emerging economies such as Romania. We explore the most important effects of public debt on economic growth like crowding-out effect, the realtionship between private and public financial transfers, the effect of public debt over GDP growth, inflation and on the sustainability of fiscal policy on the long run. Finnaly we estimate that the composition of public debt can suport debt stabilization and how debt management can stabilize the debt to GDP ratio in face to real returns and outputs growth and thus supports fiscal restraint in ensuring sustainability.

Suggested Citation

  • Marian Dobranschi, 2010. "The sustainability of public debt in Romania in economic and financial crisis," Studies and Scientific Researches. Economics Edition, "Vasile Alecsandri" University of Bacau, Faculty of Economic Sciences, issue 15.
  • Handle: RePEc:bac:fsecub:10-15-34
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    File URL: http://sceco.ub.ro/DATABASE/repec/pdf/2010/20101534.pdf
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    References listed on IDEAS

    as
    1. Melecky, Martin, 2007. "A cross-country analysis of public debt management strategies," Policy Research Working Paper Series 4287, The World Bank.
    2. Patrick Georges, "undated". "Borrowing Short- or Long-Term: Does the Government Really Face a Trade-off?," Working Papers-Department of Finance Canada 2003-16, Department of Finance Canada.
    3. Peter Claeys, 2006. "Policy mix and debt sustainability: evidence from fiscal policy rules," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 33(2), pages 89-112, June.
    4. Albu, Lucian Liviu, 2002. "Sustainability Function," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 5-14, June.
    5. Goohoon Kwon & Lavern McFarlane & Wayne Robinson, 2009. "Public Debt, Money Supply, and Inflation: A Cross-Country Study," IMF Staff Papers, Palgrave Macmillan, vol. 56(3), pages 476-515, August.
    6. Georgescu, George, 2007. "Current Account Deficits and Implications on Country Risk of Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 4(4), pages 88-96, December.
    7. Ugo Panizza, 2008. "Domestic And External Public Debt In Developing Countries," UNCTAD Discussion Papers 188, United Nations Conference on Trade and Development.
    8. Altar, Moisa & Necula, Ciprian & Bobeica, Gabriel, 2008. "Modeling The Economic Growth In Romania. The Influence Of Fiscal Regimes," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 5(4), pages 146-160, December.
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    More about this item

    Keywords

    External public debt; debt sustainability; economic growth; debt management; crowding out effect; budget deficit.;

    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
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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