Economic Themes (2013) 51 (4) 7, 713-727
Blagoj Gorgievski
Abstract: Initially the question is raised what economic theory tells us about the relationship between public debt and economic growth. However, causality is hard to establish and, in our reading of the empirical evidence, there is no paper that can make a strong case for a causal relationship going from public debt to economic growth. In several countries debt refinancing, especially of short-term issues, will contribute considerably to gross financing requirements. So far, SEE6 countries have been able to roll over their debt, but whether they can continue to do so depends on market confidence. In this sense, the task is to identify the reasons not to fall of the Macedonian economy during the global crisis, but more importantly, the role of government and monetary authorities in the design of measures and incentives by economic growth in the state of recession creating effective aggregate demand through investment financing in the public sector.
Keywords: public debt; recession; economic growth.
ECONOMIC GROWTH, RECESSION AND PUBLIC DEBT IN THE WESTERN BALKANS AND REPUBLIC OF MACEDONIA
Blagoj Gorgievski
Abstract: Initially the question is raised what economic theory tells us about the relationship between public debt and economic growth. However, causality is hard to establish and, in our reading of the empirical evidence, there is no paper that can make a strong case for a causal relationship going from public debt to economic growth. In several countries debt refinancing, especially of short-term issues, will contribute considerably to gross financing requirements. So far, SEE6 countries have been able to roll over their debt, but whether they can continue to do so depends on market confidence. In this sense, the task is to identify the reasons not to fall of the Macedonian economy during the global crisis, but more importantly, the role of government and monetary authorities in the design of measures and incentives by economic growth in the state of recession creating effective aggregate demand through investment financing in the public sector.
Keywords: public debt; recession; economic growth.
