Modeling of Monetary Financial Flows in System Dynamics

The study examines the sustainability of public and external debt burden of Pakistan and India for the period 1971–2017. The debt dynamics equation for public debt uses two components for the analysis of public debt sustainability, namely, interest rate–growth rate differential and differential of primary budget balance-to-GDP and change of reserve money-to-GDP ratio. The equation for external debt dynamics also uses two components for the assessment of external debt sustainability, namely, current account balance-to-exports ratio and differential of exports growth and interest rate. The significance of the approach used in the current study lies in the fact that in case of evaluation of countries’ debt sustainability, it is quite necessary to monitor debt trends along with emerging domestic and external vulnerabilities and systemic risks that threaten debt sustainability. This phenomenon has been captured through debt dynamics approach, which is used in the current study. The results are based on the estimation of two equations, namely, debt dynamics equation for overall public debt sustainability and debt dynamics equation for external debt sustainability. The results of the study indicate that primary budget deficit and current account deficit have played a significant role in the accumulation of public debt and external debt, respectively in Pakistan and India. The study concludes that public debt and external debt of Pakistan and India are sustainable but in a weak form.

This book deals with the dynamics of public debt and foreign assets. Accordingly the present survey aims at the dynamics of public debt and foreign assets, too. Giving a rough outline, we shall proceed in three steps. To begin with, we shall consider a closed economy, featuring the dynamics of public debt. Then we shall come to an open economy without public sector, featuring the dynamics of foreign assets. At last we shall arrive at an open economy with public sector, featuring the dynamics of both public debt and foreign assets.

The article analyzes the meaning of the concept of "public debt" according to the views of domestic and foreign scholars. The essence of this term according to norms of the Budget code of Ukraine is investigated. The activity of public authorities in the management of debt obligations of our state is considered. The state and dynamics of public debt of Ukraine for the period 2015-2019 are studied. The structure of public debt of Ukraine according to its division into external and internal is analyzed, and the shares of external and domestic debt in the total amount of public and state-guaranteed debt are determined. The dynamics of public debt obligations in terms of the amount of public and state-guaranteed debt is shown. The structure of external and internal debts of the state budget of Ukraine to the main creditors and the dynamics of payments for its repayment are described. The dynamics of the ratio of public debt to GDP of Ukraine is calculated and analyzed. The activity of a new state structure – the Debt Agency of Ukraine – in the field of debt management of our state has been studied. It is determined that a significant problem of the state is to ensure the debt burden. Ways to solve the problem of debt burden are proposed, among which an important measure is proposed – to strengthen control over the effective use of borrowed projects. It is determined that the best step in improving the system of management of debt obligations of the state can be stimulated the development of the internal capital market with the involvement of private reorientation from external to internal prevention. In modern conditions, both market economies and developing countries have inherent needs for additional funds to cover the budget deficit. This situation necessitates the constant search for additional sources of financing government liabilities, in particular, such as loans. Thus, the additional funds raised make it possible to increase total expenditures under conditions of lower national income only through a balanced and effective government policy in the field of borrowing. However, the downside of debt obligations is that sooner or later they must be repaid and interest paid for the use of these borrowed funds. The purpose of the study is to determine the structure and dynamics of public debt of Ukraine, as well as the features of its repayment.

This paper explores the dynamics of public and private debt in Ghana for the past 32 years. Ghana’s total public debt stock to Gross Domestic Product (GDP) ratio has remained above the 60.0% sustainability threshold recommended by the West Africa Monetary Zone (WAMZ) since 2013. Implemented bank reforms in the country show an upward trend for domestic credit to private sector by banks as a percentage of GDP. Using exploratory review approach, the paper identified fiscal dominance, cost of borrowing, deterioration in export earnings, ineffective fiscal, monetary and debt management policies coordination as factors responsible for changes in total public debt stock. On the other hand, increased domestic borrowings by government from the banks, and Deposit Money Banks’ (DMBs)’ adverse selection in private sector credit allocation affect changes in domestic credit to the private sector by banks. Of these causes, fiscal dominance is the major determinant of public and private debt in Ghana. The study, therefore, recommends that government should pursue fiscal operations that are necessary to put public debt on a declining path. In addition, effective coordination of fiscal, monetary and debt management policies need to be strengthened together with the autonomy of the Bank of Ghana in the use of its monetary policy instruments.

The subject of this research is public debt and its impact on the dynamics of the gross regional product (GRP) of Russian regions. The aim of the paper is to study and scenario forecast the dynamics of changes in the internal public debt of Russian regions and model its impact on the gross regional product. The relevance of the study is due to the fact that most regions in Russia are forced to increase their internal public debt to cover the budget deficit and attract additional resources to solve important problems of socio-economic development and implement strategic projects and programs. The scientific novelty of the research consists in the development of a methodological approach to modelling and scenario forecasting of the level of GRP of different groups of regions, taking into account the dynamics of changes in their public debt using ARIMA modelling methods and panel regression analysis. The authors apply the methods of panel regression analysis and ARIMA modelling. The authors theoretically substantiated that public debt has a different effect on the GRP of Russian regions, grouped the regions according to the identified trends in the dynamics of public debt (the first group — regions with the dynamics of debt reduction over the period from 2005 to 2019, the second group — with the all-Russian trend of debt reduction since 2017, and the third group — with the dynamics of increasing debt over the period under review); developed a methodological approach to modelling and scenario forecasting of the GRP level of the Russian regions, taking into account the dynamics of changes in their public debt; carried out ARIMA forecasting of the dynamics of the public debt of different groups of regions and built regression models of the influence of the dynamics of the public debt on the GRP of Russian regions within the selected groups; formed forecast scenarios for changes of the GRP level of regions, taking into account the identified dynamics of transformation of their internal public debt. Conclusions: public debt has a negative impact on the dynamics of the GRP of Moscow and the Moscow region and a positive effect on the dynamics of the GRP of the regions of the second and third groups. The findings of the study may be used by the federal and regional executive authorities to find ways to reduce public debt and increase the level of socio-economic development of territories.

This study investigated the stabilizing effect of sustainable fiscal policy on public debt dynamics as well as the impact of debt dynamics on fiscal sustainability in Nigeria for the period (1980 – 2022). Using secondary data obtained from the Central Bank of Nigeria Statistical Bulletin (2023), World Development Indicators (WDI, 2023), Debt Management Office (DMO – various years), Penn World Table (PWT – multiple years), and World Economic Outlook (WEO – various years), the study used suitable cointegration and other econometrics techniques viz: Dynamic Ordinary Least Squares (DOLS), Markov-switching model and polynomial models. It was found, amongst other things, that (i) Automatic debt dynamics can influence debt dynamics, (ii) The robustness or otherwise of primary fiscal balance determines the direction of changes in the total debt stock, and (iii) positive debt dynamics vis-à-vis dwindling revenue flows and growing government expenditure, would result in fiscal unsustainability. It was recommended, amongst other things, that since automatic debt dynamics is one of the significant influences on debt dynamics and is being fuelled by the direction of adjustments in inflation and interest rate, there is a need for concerted efforts at stabilising inflation and interest rate to stabilise public debt dynamics. Also, the study revealed that the size of the primary balance influences the changes in public debt stock. It was recommended that the authorities should endeavour to maintain a robust primary fiscal surplus to stabilise growth in public debt, if not minimise it and grow the economy.

Public Debt and its Determinants in Low Income Countries - Results from 7 Country Case Studies

Tax evasion can have important consequences for the macroeconomic and social balance of a country, as well as for its monetary and fiscal development. A limited number of studies dealing with the consequences for fiscal imbalance are present, but their objectives vary a lot. This analysis has been conducted with the purpose to empirically assess the impact of the tax evasion changes on the public debt in the 28 EU countries. The research considers the dynamics of public debt during the period of 21 years. The research is based on a probabilistic sensitivity analysis approach that was conducted individually for four clusters using @Risk of Palisade Decision Tools Package. The analysis showed a negative correlation between the tax evasion and the public debt, where the growth of the tax evasion is connected with the decrease of the public debt in a given country. The extent of the effect varies depending on the country, or more precisely on the groups of countries and is conditioned by other macroeconomic variables.

Objective. The objective of the article is to assess the state of debt indicators, identify posi­tive and negative changes in the structure and dynamics of debt indicators, forecast the amount of public debt of Ukraine, and develop recommendations to ensure medium-term debt sustainability of the state in the context of anticrisis action plan. Methods. The theoretical basis of the study is the scientific works of domestic andforeign sci­entists on public debt management, debt policy, debt sustainability and debt security of the state. The following research methods are used in the research process: analysis and synthesis (to deter­mine crisis and intercrisis periods), historical-logical (to group and determine causal relation­ships), econometric modeling (to build models for forecasting VAT and public debt) and scenario analysis (to assess possible options for further events). Results. Based on the analysis of statistics on public debt, budget deficit, their ratio to GDP, the main trends in public policy regarding compliance with the convergence criteria, three historical periods in the dynamics of public debt and budget deficit are identified, the causes and conse­quences of financial crises are determined. A fundamentally new approach to forecasting public debt and determining the safe amount of additional borrowing in accordance with safe sources of debt repayment is proposed, the choice of such sources is justified. A regression model of public debt forecast is built. In order to ensure the solvency of the state in the medium term, a system of tactical measures in the field of tax and budget policy is proposed.

This paper provides an analysis of the theoretical and empirical foundations of public debt dynamics in Zimbabwe. The analysis was undertaken by applying the debt dynamics equation that enables estimating the required primary balance, building on the government inter-temporal budget constraint to infer the factors that influence public debt, as well as to ascertain specific policy issues required to ensure a sustainable public debt structure. The results show that debt dynamics in Zimbabwe are largely composed of huge stock flow adjustments to finance social and political related expenditures. Results also indicate that the output gap had a significant influence on public debt dynamics in Zimbabwe. As such, the results underscore the need for prudent debt management to guard against unexpected changes in public debt, which are not explained by fundamentals. The major policy implication from the study is the need to minimize the interest rate growth differential and to implement growth enhancing fiscal policies to ensure a sustainable long term public debt position.

ABSTRACTPublic debt in the United States has continued to rise despite the implementation of various policy measures aimed at curbing its growth. The Autoregressive Distributed Lag (ARDL) and Dynamic Simulated ARDL models were used to examine the effect of fiscal stance and fiscal rules on the dynamics of US public debt. The findings reveal that while fiscal tightening is useful in reducing public debt accumulation, the adoption of fiscal rules may be unbeneficial for curtailing public debt, implying that discretion, rather than rules, may be more desirable for public debt management in the United States.

Rising public debt in sub-Saharan Africa remains a matter of concern. We provide an analysis of public debt and debt sustainability in Tanzania, focusing on external debt. Though current and previous analyses using the IMF-World Bank debt sustainability framework indicate low risk of public external debt distress, these analyses are sensitive to exchange rate volatility and export shocks and are predicated on strong assumptions of robust future economic growth and reduced government borrowing.

One of the tools of economic policy of any country is efficient public debt management, which influences and determines the dynamics of key macroeconomic indicators. The study aims to assess how public debt management affects Ukraine’s macroeconomic development. The analyzed period includes data of 2015–2021. Econometric modeling is used to establish the existence of causal relationships between the dynamics of public debt and changes in key macroeconomic indicators using the Granger causality test and VAR (Vector Autoregression) model. The obtained results demonstrate that during the study period, the strongest links existed between the public debt and GDP, debt servicing and Ukraine’s total state budget expenditures, public debt and consumer price index, real effective exchange rate index of the hryvnia to the US dollar, and political stability index. At the same time, the calculations proved that public debt does not have a significant impact on foreign direct investment and the level of imports of goods and services. The proposed model allows for forecasts for future periods and can be used in developing public debt management policy.

This article is devoted to the state of public global public debt and new approaches towards its regulation in both developed and developing countries. The subject of this research is public debt in different groups of countries. Analysis of the situation with global public debt and the peculiarities of its regulation is necessary to learn positive foreign experience for its possible application in Russia. The following factors of significant increase of public debt are outlined: severe reduction of economic activity and decline in government revenue; increase of public spending, including related to anti-crisis measures; growing primary deficit, and this, the need to increase borrowings. The countries with low and middle income additionally face significant capital outflows from their financial markets, devaluation of national currencies, and difficulties with debt refinancing. Analysis is conducted on the structure and dynamics of public debt that developed due to the COVID-19 pandemic. The author describes the risks associated with public debt. It is noted that many developed countries were able to adjust their financial operations in response to the growing need for borrowed funds: change the existing mechanisms for entering the debt market; amend the practice of conducting auctions government securities auctions. Developing countries need debt restructuring. The conclusion is made that the debt relief process requires new approaches towards debt management, including new methods of risk mitigation, enhanced control aimed at countering “credit bubbles”; clear regulation of debt restructuring observed by all creditors.

Maintaining healthy public finances is essential for financial stability and economic growth. This study examines Macedonian public debt dynamics from 2002 to 2023, focusing on the primary budget balance, the interest-growth differential (snowball effect), and stock-flow adjustments. The snowball effect, where the debt ratio changes based on whether GDP growth surpasses or lags behind interest rates, is emphasized. Recent challenges include sluggish economic growth due to declining external demand and rising food and energy prices, coupled with increasing interest rates, exacerbating the snowball effect. Using the Ordinary Least Squares (OLS) method, the study analyzes how macroeconomic variables like foreign direct investment, trade openness, and unemployment, alongside institutional factors such as government effectiveness and corruption, influence debt dynamics. Policy recommendations stress the need for enhanced fiscal discipline, measures to stimulate economic growth, and improved institutional frameworks to mitigate the adverse effects of the snowball effect on public debt.