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The Impact of the Economic and Financial Global Crisis on Public Indebtedness in Developed Economies

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  • Bilan Irina

    () („Al. I. Cuza” University of Iasi)

Abstract

In this paper we intend to briefly analyze the evolution of public debt in developed countries, on the background of the global economic and financial crisis, also highlighting the specific factors leading to its accumulation and the solutions possible to apply in order to reduce its level. We find that developed countries' public debt, already very high before the crisis, has substantially increased over the past two years, mainly due to the sharp increase in budget deficits, both as a consequence of cyclical revenue and expenditure increases and of anticyclical budgetary policy measures, threatening to evolve into an unsustainable level. Although several strategies could be conceived to reduce public debt to a sound level, the most appropriate consists in adjusting budget balances so as to have a structural budget surplus on the medium-term.

Suggested Citation

  • Bilan Irina, 2010. "The Impact of the Economic and Financial Global Crisis on Public Indebtedness in Developed Economies," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 1426-1430, May.
  • Handle: RePEc:ovi:oviste:v:10:y:2010:i:1:p:1426-1430
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    Keywords

    public dedt; policy; crisis; global economic; budget deficit;

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G01 - Financial Economics - - General - - - Financial Crises

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