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Public debt and financial development

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  • Natia KUTIVADZE

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Abstract

We investigated the relation between public debt and financial development by controlling the macro and institutional factors in which the debt was issued in countries grouped by income levels for the period of 1994 to 2007. Our findings confirms that the development of a domestic debt market and reliance on domestic debt positively correlates with the level of financial development and macroeconomic stability, while it could have a complex interaction with the institutional framework. The results are robust across specifications and estimation strategies. The issue we address has not only a theoretical but also a policy relevance.

Suggested Citation

  • Natia KUTIVADZE, 2011. "Public debt and financial development," Departmental Working Papers 2011-13, Department of Economics, Management and Quantitative Methods at Universit√† degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2011-13
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    File URL: http://wp.demm.unimi.it/files/wp/2011/DEMM-2011_013wp.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial Development; Public Debt; Domestic Debt;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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