Theoretical and Applied Economics
No. 4 / 2024 (641), Winter
Two faces of the same coin: integrated perspectives of public and private debt on the effects of interdependence on financial stability
Bucharest University of Economic Studies, Romania
Abstract. The issue of public and private debt has become one of the central themes in global economics and finance, especially in the context of the recent economic crisis and the expansion of financial markets. This paper brings together the findings of cerebral studies that explore the combined impact of public and private debt on economic growth with the focus on their interdependence as well as the implications for macroeconomic policies. Paper highlights how these types of debt influence each other and contribute to the financial stability or instability of both developed and emerging economies. Over the past decades, debt accumulation has become a key driver for economic development supporting investment in infrastructure and innovation. However these benefits come with significant risk, particularly when the level of indebtedness exceeds certain critical thresholds. Public debt is generally used to finance long-term projects and stimulate the economy during recessions, and private debt which contributes to consumption and private sector development are not easily isolated from one another. These two forms of debt interact in ways that can generate both positive synergies and amplify the negative effects. This paper brings together the conclusions of several studies that explore the combined impact of public and private debt on economic growth focusing on their interdependence and the implications for macroeconomic policies. Throughout the analysis of various perspectives ranging from critical debt thresholds to spillover effects between regions, the paper aims to provide the number of how that can become a systemic risk factor. Moreover, it explores the relationship between sovereign debt and the financial sector which can amplify vulnerabilities during crisis periods and presents the policies needed to manage these risks.
Contents
Digitalization and innovation: a regional perspective on their interaction
Assessing the macroeconomic challenges in Romania after the economic and financial crisis
Green finance and innovation input: the promoters of carbon neutrality in China
A simple model of online marketing, production, profit and growth
The relationship of digital payments, macroeconomic variables, and banking stability in developing Asia
Modelling the relationship between inflation and uncertainty with existence of structural break: evidence from Azerbaijan
Analysis of the global energy resources evolution in the context of the population growth
Assessing the impact of energy and macroeconomic shocks on the Romanian economy: a Bayesian VAR approach
Two faces of the same coin: integrated perspectives of public and private debt on the effects of interdependence on financial stability
Institutional quality and sustainability: empirical study in 11 MENA countries
The effect of population ageing on savings: a time series analysis for Türkiye
Workplace economics – How does the Impostor Syndrome affect organisational output?
COVID-19 and the labour market: regional shifts of human capital working in technology and employment
Validity of the environmental Kuznets Curve in Bangladesh under the role of financial development
The impact of doing business indicators on economic growth in emerging market economies: a cross-sectional analysis
The essential role of U.S.-China tensions: a fresh insight into the gold market
The dispersion of poverty in some Romanian rural areas – good examples of rural localities with the lowest poverty rates
The stability and Growth Pact in Practice: inefficiencies of previous debt rules and the way forward
Leaders in disguise: power, perception, and paradox – economics and the fragile authority of politicians
Investigating the corporate debt and real investment nexus: dynamics and challenges in a shifting financial landscape
The hidden economy revealed: profiling informal workers through random forest classification
The impact of oil price shocks on economic growth in Algeria
The determinants of political instability: the role of mining resources
Quantitative easing and its implications for contingent convertible triggers: an analytical perspective