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The government spending on development sector plays a significant role towards economic growth as it is the most powerful economic agent in all modern societies. The main objective of this paper is to explain theoretically the phenomenon of unique debt burden shifting and welfare loss in countries under debt trap with the support of descriptive statics of a panel of fourteen, Asian Pacific Developing Countries (APDC). This paper is an extension of our previous paper on debt trap and basic borrowing fundamentals (see Alam & Taib, 2012). The analysis shows that the government spending on development sector plays significant role towards economic performance of the country and improves welfare of its citizens. Any decrease in government development spending affects country"s economy negatively and hurts welfare of the citizens. It provides guidelines for the policy makers on choice between debt and tax especially in the servicing of public debt.

This study proposes a synthetic visual indicator with which to perform debt sustainability analysis using dynamic general equilibrium models. In a single diagram, we summarized the general equilibrium relationships among economic activity, government budget, and the maximum amount of sustainable public debt. Then, we measured sustainability using the distance of actual debt from the model-consistent maximum debt. This indicator can be implemented with any DSGE model; as a backing theory, we used a neoclassical model augmented with endogenous tax revenues, disaggregated public spending, different production technologies for public and private goods, non-atomistic wage setters in public labor (unions), and a fully specified maturity curve for public bonds. We provided an example of its usage using the case of Greece during the last public debt crisis. To perform the numerical analysis, we developed original software, whose advantage is allowing an audience without expertise in DSGE models to perform general equilibrium debt sustainability analyses without requiring an understanding of the technicalities of DSGE models.

We generalize endogenous growth models, which often assume a closed-economy, toallow for international borrowing and lending. We incorporate a prominent feature of globalfinancial markets, that the marginal cost of borrowing facing a small open economy is dependent on the country risk as perceived by international lenders. This interest rate premium is determined by the ratio between debts and country assets that can be used for debt collateral. Consequently, the cost of credit is jointly influenced by international financial parameters and by endogenous country policies and growth patterns. To highlight the implications of integrating international financial considerations into an otherwise real growth model, we first use the simplest (and arguably, the most popular) one- factor growth model, the AK one, and assume that all real factors of production can be used as collateral. The model yields long-run conditions under which the country becomes a borrower in international markets, remains closed or accumulates financial wealth. The model highlights the special conditions corresponding to the solution to an AK growth model, but the outcomes of the model are richer and perhaps more realistic than conventional endogenous growth solutions. However, extending the model to include another reproducible, non-collateral asset allows for transitional dynamics but does notchange the basic insights derived using the simple one-factor model. ; In der vorliegenden Studie werden endogene Wachstumsmodelle, welche oft eine geschlossene Wirtschaft zugrunde legen, verallgemeinert, um die Berücksichtigung internationaler Schuldenaufnahme und Kreditgewährung zu ermöglichen. Wir inkorporieren ein hervorstechendes Merkmal der globalen Finanzmärkte, nämlich dass die Grenzkosten der Schuldenaufnahme, mit denen eine kleine offene Wirtschaft konfrontiert wird, von der Einschätzung des "Länderrisikos" von Seiten der internationalen Kreditgeber abhängen. Dieser Zinssatzaufpreis wird bestimmt von dem Verhältnis zwischen den Schulden und den Vermögenswerten des Landes, die als Sicherheit hinterlegt werden können. Somit werden die Kreditkosten sowohl von internationalen Finanzparametern als auch von der endogenen Länderpolitik und Wachstumsmustern beeinflusst. Um die Auswirkungen der Integration von internationalen finanziellen Erwägungen in ein ansonsten reales Wachstumsmodell hervorzuheben, wenden wir zunächst das einfachste (und wohl gängigste) Ein-Faktor Wachstumsmodell, das AK-Modell, an und gehen von der Annahme aus, dass alle realen Produktionsfaktoren als Sicherheit genutzt werden können. Das Modell liefert langfristige Bedingungen, unter denen ein Land ein Kreditnehmer in internationalen Märkten wird, geschlossen bleibt oder finanziellen Wohlstand akkumuliert. Das Modell hebt die besonderen Bedingungen hervor, die der Lösung eines AK-Wachstumsmodells entsprechen. Die Resultate des Modells sind jedoch ergiebiger und vielleicht realistischer als die Ergebnisse konventioneller endogener Wachstumsmodelle. Die Ausweitung des Modells zur Einbeziehung eines weiteren reproduzierbaren, nicht als Sicherheit nutzbaren Vermögenswertes lässt zwar vorübergehende Dynamiken zu, ändert aber nicht die grundlegenden Einsichten, welche aus der Anwendung des einfachen Ein-Faktor Modells herrühren.

This paper is linked to two debates on fiscal policies: first, the implications of low interest-growth differentials for debt sustainability and, second, the reform of the EU fiscal governance framework. In both debates the choice of government debt anchor and the speed of adjustment take centre stage. The Stability and Growth Pact's debt rule appears predestined to fulfil the role of debt anchor. However, our analysis shows that its existing design gives rise to a pro-cyclical bias that has hampered its implementation in the low-growth low-inflation environment. We propose two parametric changes to better balance the objectives of macroeconomic stabilisation and debt sustainability: first, accounting for persistent deviations of in ation from the central bank's objective; and, second, a reduced speed of adjustment. Putting a reformed debt rule at the centre of the EU fiscal governance framework would allow reducing the latter's complexity without the need to revise the EU Treaties.

We examine debt-sensitive majority rules. According to such a rule, the higher a planned public debt, the higher the necessary parliamentary majority to approve it. In a two-period model, we compare debt-sensitive majority rules with the simple majority rule when individuals differ regarding their benefits from public good provision. We establish the existence of Condorcet winners under debt-sensitive majority rules and derive their properties. We find that equilibrium debt-levels are lower under the debt-sensitive majority rule if preferences regarding public goods are sufficiently heterogeneous and if the impact of debt on future public good provision is sufficiently strong. We illustrate how debt-sensitive majority rules act as political stabilizers of negative macroeconomic shocks.

We examine debt-sensitive majority rules. According to such a rule, the higher a planned public debt, the higher the parliamentary majority required to approve it. In a two-period model we compare debt-sensitive majority rules with the simple majority rule when individuals differ regarding their benefits from public-good provision. We establish the existence of Condorcet winners under debt-sensitive majority rules and derive their properties. We find that equilibrium debt-levels are lower under the debt-sensitive majority rule if preferences regarding public goods are sufficiently heterogeneous and if the impact of debt on future public-good provision is sufficiently strong. We illustrate how debt-sensitive majority rules act as political stabilizers in the event of negative macroeconomic shocks.

I analyze how lack of commitment affects the maturity structure of sovereign debt. Governments balance benefits of default induced redistribution and costs due to income losses in the wake of a default. Their choice of short- versus long-term debt affects default and rollover decisions by subsequent policy makers. The equilibrium maturity structure is shaped by revenue losses on inframarginal units of debt that reflect the price impact of these decisions. The model predicts an interior maturity structure with positive gross positions and a shortening of the maturity structure when debt issuance is high, output low, or a cross default more likely. These predictions are consistent with empirical evidence.

We examine the implications for optimal inflation of changes in the level and maturity of government debt under the assumption where fiscal and monetary policies co-ordinate, and in the case of an independent central bank following a Taylor rule. Under co-ordination, inflation persistence and volatility depend on the sign, size and maturity of debt. Higher debt leads to higher inflation and longer maturity leads to more persistent inflation although inflation plays a minor role in achieving fiscal sustainability. Under an independent monetary authority, inflation is higher, more volatile and more persistent and plays a significant role in achieving fiscal solvency. The Economic Journal © 2013 Royal Economic Society. ; Marcet is grateful for support from DGES, Monfispol and Excellence Program if Banco de Espana. Faraglia and Scott gratefully acknowledge funding from the ESRC's World Economy and Finance Program. Oikonomou is grateful to HEC Montreal for funding ; Peer Reviewed

This study provides empirical evidence that the costs of austerity crucially depend on the level of private indebtedness. In particular, fiscal consolidations lead to severe contractions when implemented in high private debt states. Contrary, fiscal consolidations have no significant effect on economic activity when private debt is low. These results are robust to alternative definitions of private debt overhang, the composition of fiscal consolidations and controlling for the state of the business cycle and government debt overhang. I show that deterioration in household balance sheets is important to understand private debt-dependent effects of austerity.

International Debt Statistics (IDS) 2016 (formerly Global Development Finance) provides statistical tables showing the external debt of 125 developing countries that report public and publicly guaranteed external debt to the World Bank's Debtor Reporting System (DRS). It also includes tables of key debt ratios for individual reporting countries and the composition of external debt stocks and flows for individual reporting countries and regional and income groups, along with some graphical presentations. IDS 2016 draws on a database maintained by the World Bank External Debt (WBXD) system. Longer time series and more detailed data are available from the World Bank open databases, which contain more than 200 time series indicators, covering the years 1970 to 2014 for most reporting countries, and pipeline data for scheduled debt service payments on existing commitments to 2020. International Debt Statistics 2016 is unique in its coverage of the important trends and issues fundamental to the financing of the developing world. This report is an indispensable resource for governments, economists, investors, financial consultants, academics, bankers, and the entire development community. In addition, International Debt Statistics will showcase the broader spectrum of debt data collected and compiled by the World Bank. These include the high frequency, quarterly external debt database (QEDS) and the quarterly public sector database (QPSD) developed in partnership with the International Monetary Fund and launched by the World Bank.

This study provides empirical evidence that the costs of austerity crucially depend on the level of private indebtedness. In particular, fiscal consolidations lead to severe contractions when implemented in high private debt states. Contrary, fiscal consolidations have no significant effect on economic activity when private debt is low. These results are robust for alternative definitions of private debt overhang, the composition of fiscal consolidations and controlling for the state of the business cycle and government debt overhang. I show that deterioration in household balance sheets is important to understand private debt-dependent effects of austerity. ; In dieser Studie wird empirisch gezeigt, dass die realwirtschaftlichen Auswirkungen von Austeritätsmaßnahmen maßgeblich von dem Niveau der privaten Verschuldung abhängen. In Zeiten hoher privater Verschuldung, führen fiskalische Konsolidierungen zu einem signifikanten Rückgang der wirtschaftlichen Aktivität. Ist die private Verschuldung dagegen gering, haben Konsolidierungen keinen nennenswerten realwirtschaftlichen Effekt. Diese Ergebnisse sind robust gegenüber alternativen Definitionen von privaten Verschuldungsregimen, der Komposition fiskalischer Konsolidierungen und wenn man zusätzlich für den Konjunkturzyklus und öffentliche Verschuldung kontrolliert. Ich zeige, dass private verschuldungsabhängige Konsolidierungseffekte durch eine Verschlechterung der privaten Haushaltsbilanz erklärt werden können.

International Debt Statistics (IDS) is a longstanding annual publication of the World Bank featuring external debt statistics and analysis for the 122 low- and middle-income countries that report to the World Bank Debt Reporting System (DRS). The content coverage of this IDS includes:.1) a user guide describing the IDS tables and content, definitions and rationale for country and income groupings, data notes, and description of the additional resources and comprehensive datasets available to users online, 2) a brief overview analyzing global trends in debt stocks and debt flows to low- and middle-income countries within the framework of aggregate capital flows (debt and equity), 3) a feature story on lending by the World Bank in recognition of the institution's 75th anniversary, 4) tables and charts detailing debtor and creditor composition of debt stock and flows, terms volume and terms of new commitments, maturity structure of future debt service payments and debt burdens, measured in relation to GNI and export earnings for each country, and 5) one-page summaries per country, plus global, regional and income-group aggregates showing debt stocks and flows, relevant debt indicators and metadata for 5 years (2014-2018).

This year's edition of International Debt Statistics, successor to Global Development Finance and World Debt Tables, is designed to respond to user demand for timely, comprehensive data on trends in external debt in low- and middle-income countries. The World Bank's Debtor Reporting System (DRS), from which the aggregate and country tables presented in this report are drawn, was established in 1951. World Debt Tables, the first publication that included DRS external debt data, appeared in 1973 and gained increased attention during the debt crisis of the 1980s. Since then, the publication and data have undergone numerous revisions and iterations to address the challenges and demands posed by the global economic conditions. Presentation of and access to data have been refined to improve the user experience. The online edition of International Debt Statistics 2019 now provides a summary overview and a select set of indicators, while an expanded dataset is available online (datatopics.worldbank.org /debt/ids).

Government debt is high in most developed countries, and while it may reflect short-term attempts to kick-start the economy in times of crisis through fiscal stimulus, the longer-term consequences risk being detrimental to investment and growth. This makes it important to identify factors that are associated with debt. While previous studies have related government debt to economic and political variables, they have not incorporated the degree to which the economy is regulated. Using regulatory freedom (absence of detailed regulation of labor, business and credit) from the Economic Freedom of the World index, we conduct an empirical analysis covering up to 67 countries in the period 1975-2010. The main finding is that regulatory freedom, especially for credit, affects debt development negatively. The effect is more pronounced when the political system is fractionalized and characterized by strong veto institutions, indicating policy stability and credibility, and when governments have a right-wing ideology.

We develop a new measure of relative debt transparency by comparing the amount of state debt reported in the annual Census survey and the amount reported in the statistical section of the state Comprehensive Annual Financial Report (CAFR). GASB 44 requires states to start reporting their total debt in the CAFR statistical section in FY 2006. However, states are allowed to use accounting choices to exclude some dependent agencies' debt, which contributes to a gap between the two data sources. The regression results suggest that the gap tends to increase when states face greater fiscal stress or less political competition. Such patterns are not found in the pre-GASB 44 period.