This article explores the theoretical foundations and historical perspectives of fiscal policy, emphasizing its role in economic stabilization and the management of economic cycles. It traces the evolution of economic ideas, from classical orthodoxy, focused on strict budgetary balance and limited state intervention, to the Keynesian revolution, which positioned fiscal policy as a strategic tool for influencing aggregate demand. The article also examines the main instruments of fiscal policy, including public spending, taxation, and debt, while detailing their effectiveness and limitations in various economic contexts. Finally, particular attention is given to automatic stabilizers and fiscal approaches specific to developing countries, highlighting the importance of balanced management to achieve sustainable growth and macroeconomic stability.

ABSTRACT The Recovery and Resilience Facility (RRF) has marked a transformative development in the European Union (EU)’s economic governance. Its ambition prompted tense negotiations at EU level. Yet implementation within member states has proceeded with remarkably little contestation. This article examines the puzzle of the RRF’s ‘quiet implementation’ at national level. Drawing on an analytical framework that contrasts democratic legitimacy (the involvement of parliaments, political parties and subnational authorities) with technocratic legitimacy (executive authority and delegation to experts), it analyses two critical cases – Spain and Italy. As the largest recipients of RRF funding, both are highly exposed to EU conditionality and characterised by high public debt, fragmented party politics, government instability and strong regional authority. Given these features, one would expect substantial politicisation. Yet we find that in neither case did meaningful contestation emerge. We argue that this outcome stems from domestic institutional arrangements that foster depoliticisation by centralising decision-making within the executive and limiting parliamentary and subnational involvement in the implementation process – dynamics that prime ministerial offices could strategically exploit. We conclude by linking these findings to wider patterns of RRF implementation and EU economic governance, specifying the conditions under which executives can shield large-scale spending programmes from political debate.

Purpose: Sierra Leone’s FY2026 Appropriation Act reveals a fiscal structure in which public debt servicing exerts strong pressure on fiscal space. This paper examines how debt-service obligations constrain the government’s ability to finance key development sectors, using the FY2026 national budget as the central analytical reference. Methodology: The study adopts a qualitative and document-based analytical approach, drawing on data from official Ministry of Finance documents, including the FY2026 Appropriation Act, Budget Estimates, and IMF–World Bank debt sustainability assessments. The analysis shows that with NLe 8.63 billion allocated to debt charges out of a NLe 27.72 billion Consolidated Fund appropriation, debt servicing absorbs nearly 31% of available resources. When considered within the broader NLe 30 billion expenditure-plus-net-lending envelope, debt servicing still accounts for about 29% of total government spending. Findings: The findings indicate that rising debt-service obligations increase rollover risks, restrict fiscal space, and limit the government’s capacity to invest in essential sectors such as education, health, agriculture, water, and public infrastructure. Unique Contribution to Theory, Practice and Policy: The paper concludes that strengthening revenue mobilisation, improving debt management strategies, and prioritising concessional borrowing are necessary to expand fiscal space and support sustainable development.

This study examines the dynamics of public debt in the Philippines using the Autoregressive Distributed Lag (ARDL) and Vector Error ‎Correction Model (VECM) frameworks over the period 2005–2023. The empirical findings indicate that public debt dynamics are driven ‎predominantly by short-run macro-financial shocks rather than long-run structural factors. Although government expenditure exhibits a ‎positive coefficient in the long-run estimates, it is not statistically significant, suggesting that expenditure growth alone does not consistently ‎explain long-term debt accumulation. In contrast, the short-run results reveal strong and persistent effects of government expenditure across ‎multiple lag periods, highlighting its immediate role in shaping fiscal imbalances during crisis episodes and periods of elevated public ‎spending. Exchange rate depreciation also emerges as a significant short-run determinant, intensifying debt burdens through the valuation ‎effects of foreign-denominated liabilities. Inflation displays a nonlinear short-run impact, initially reducing the real value of debt but eventually exacerbating fiscal pressures when inflation persists. Meanwhile, stock market prices, government revenues, and interest rates do not ‎exert statistically significant effects in either the short or long run, reflecting the limited transmission of capital market signals and the gradual nature of structural revenue adjustments in the Philippine context. The policy implications underscore the importance of improving ex‎penditure efficiency, strengthening revenue mobilization, and reducing reliance on foreign-currency borrowing. The findings further high-‎light the need for credible inflation management and robust countercyclical fiscal buffers to mitigate the debt-creating effects of macroeconomic shocks. By identifying expenditure and exchange rate dynamics as key drivers of short-run debt fluctuations, this study contributes to ‎the literature on fiscal sustainability in emerging economies and offers evidence-based insights for Philippine policymakers seeking to balance growth objectives with debt stability‎.

This paper systematically investigates the disaggregated effects of public debt on fiscal stability in Nigeria from 1980 to 2022, a period marked by structural adjustments, fiscal crises, oil price volatility, and changing debt management practices. After obtaining stationarity, data was analysed using the Autoregressive Distributed Lag (ARDL) approach. The results indicate that domestic debt, debt service payments, foreign reserves, currency rates, and private investment all contribute to macroeconomic instability. Foreign direct investment inflows improved fiscal stability in the long and short term. External debt, interest rates, and trade openness all have different immediate and long-term repercussions. Despite the fact that public borrowing is a crucial tool for promoting development, the results show that Nigeria's debt profile has been undermined by poor revenue capacity, ongoing fiscal deficits, governance issues, and inefficient use of borrowed funds, To reduce vulnerability to external shocks, the study suggests strengthening domestic revenue mobilization, prioritizing concessional borrowing, improving debt management transparency, increasing public investment efficiency, and diversifying the economy. These steps are critical for achieving sustainable debt management and ensuring that public borrowing contributes meaningfully to long-term economic growth.

The research aims to estimate the fiscal reaction function in Iraq as a quantitative tool to measure the government's response to public debt movements and assess its commitment to achieving financial sustainability. The study adopted the quantitative analytical approach in analyzing annual time series data using the Autoregressive Distributed Lag (ARDL) model during the period (2005-2023) in addition to single root and cointegration tests to analyze the relationship between the primary balance to GDP ratio and a number of macro variables, such as the public debt to GDP ratio, the ratio of oil revenues to total public revenues, the government spending gap in real terms, and the output gap in real terms. The research assumed that fiscal policy responds to the rise in public debt by improving the primary balance of the budget, thus ensuring financial sustainability in the long term. The study found that fiscal policy in Iraq does not respond effectively to public debt levels, reflecting a lack of fiscal engagement with debt accumulation. This is an indicator of deficiencies in the public debt management framework and a direct threat to the sustainability of public finances in the short and long term. The study concluded that a proactive fiscal policy should be adopted within a medium-term framework, aiming to reduce dependence on oil, diversify revenue sources, and enhance the resilience of public finances in the face of shocks.

While public debt is vital for economic growth and development, a heavy debt burden has adverse effects. Therefore, there is a debate about how public debt will affect economic growth. This study investigates the public debt and economic growth nexus in Türkiye using the Fourier-Augmented ARDL methodology over the years 1968-2019. Although Türkiye has a moderate level of public debt, it has significantly lost its fiscal space because of geopolitical risks, irregular migration, natural disasters, inaccurate economic policies, and the economic crises it has frequently faced in the last decade. Our analysis demonstrates that public debt has a detrimental impact on economic growth, as evidenced by linear and nonlinear models. These findings remain consistent even after conducting robustness checks. However, our nonlinear model differs from the majority by indicating a U-shaped relationship between public debt and economic growth, featuring a 61-63% threshold. Therefore, increasing public debt to stimulate growth is not a viable policy. Instead, policymakers should prioritize borrowing to fund productive investments that increase output and employment rather than financing budget deficits and increasing the debt burden. For Türkiye, these initiatives can increase the welfare of present and future generations and make both public debt and economic growth sustainable.

Persistent income inequality and uneven economic development remain pressing challenges in Malaysia despite decades of public investment across key sectors. This study investigates the sectoral allocation of government spending and its impact on economic growth and income distribution, focusing on four critical areas: public pension payments, agriculture and rural development, education and training, and healthcare. Motivated by concerns about rising public debt, inefficient fiscal allocation, and growing public dissatisfaction, this study addresses a gap in the literature by providing a comparative long-term analysis of spending effectiveness across key sectors. Using time series data from 1980 to 2021 and applying the autoregressive distributed lag (ARDL) model, the study reveals that spending on agriculture and rural development and education and training significantly contribute to long-term economic growth. By contrast, health and pension expenditures were found to be statistically insignificant in driving growth. Regarding income inequality, only agriculture and rural development spending show a long-term impact, while pension spending has short-run significance. This study makes a novel contribution by jointly examining the effects of government spending on both economic growth and income inequality across key sectors, providing actionable insights for more focused and efficient fiscal policymaking. The findings highlight the importance of prioritizing productive sectors, re-evaluating pension policies, and ensuring transparency in fiscal management to enhance growth and equity outcomes in Malaysia.

In general, issues of organising trading and increasing transparency in the financial market, and in particular in the government bond market, are of paramount importance. Consequently, international organisations that regulate the securities market are developing specific standards and rules on these issues. These issues are of particular importance due to their significant impact on liquidity, efficiency, and risk in the market. From the perspective of public debt management policy, the latter are also of significance. The purpose of this analysis is to propose key areas for developing and improving this system in the Republic of Armenia. These recommendations are based on a study of international norms and experience in organising the secondary market for government bonds and transparency systems.

The article examines the current state, dynamics, and key features of the development of the government securities market in Ukraine under conditions of martial law and increased fiscal pressure. Particular attention is paid to the role of domestic government bonds as a primary instrument for mobilizing financial resources to finance the state budget, support defense expenditures, and maintain macrofinancial stability. The study analyzes changes in the structure of investors, highlighting the growing participation of the banking sector, the National Bank of Ukraine, and households, alongside a significant decline in the share of non-resident investors due to heightened military, currency, and macroeconomic risks. Special emphasis is placed on military government bonds as an innovative tool of domestic borrowing that combines fiscal, social, and stabilization functions and strengthens public confidence in state financial instruments. The paper provides an assessment of the impact of wartime economic conditions on bond yields, maturity structure, and investor behavior, as well as the implications for public debt sustainability. The article identifies the main challenges hindering the development of the government securities market, including limited liquidity of the secondary market, high concentration of ownership, currency volatility, inflationary pressures, and imperfections in the regulatory, technological, and information infrastructure. Attention is also drawn to the insufficient level of financial literacy and its influence on the participation of retail investors. The research substantiates strategic directions for further development of the market, such as deepening digitalization of issuance, settlement, and trading processes, expanding the investor base through enhanced financial inclusion and institutional demand, and harmonizing regulatory frameworks with European standards. It is argued that in the postwar period the government securities market can become a crucial mechanism for financing economic recovery, infrastructure reconstruction, and long-term growth, provided that a prudent debt policy, effective risk management, and sustainable fiscal governance are ensured.

Although pandemics are non-economic shocks, they can generate systemic macroeconomic instability by simultaneously disrupting production and consumption, disturbing prices and expectations, exerting pressure on fiscal and monetary balances, and rapidly transmitting through trade, tourism, and international capital flows. This paper synthesizes international evidence and derives policy implications for Vietnam: (i) integrating pandemic risks into macroeconomic management and forecasting frameworks; (ii) prioritizing preventive healthcare, data governance, and strategic communication to reduce policy response delays; (iii) ensuring the continuity of logistics and supply chains; (iv) designing targeted support packages focused on preserving employment and cash flows; and (v) flexibly coordinating fiscal, monetary, and external policies while safeguarding financial stability and public debt sustainability.

Abstract This article seeks to add depth to the intellectual career of André Vincent and Alfred Sauvy, two notable French economists, by identifying them as the authors of three articles that were originally published anonymously in 1942 and 1943. Those writings, published by the Institut de conjuncture, were intended to inform French economic authorities on the challenges facing France for reconstruction. To do so, the authors developed a model to conceptualize ways to deal with the combined wartime challenges of rising note circulation and prices, increasing state debt, and the need to finance reconstruction. The evolution of their policy advice is a good illustration of the dynamic essential to the “science de la conjoncture” spearheaded by Sauvy and Vincent: adapting analysis and policy recommendations in a period of rapid change.

Public debt and economic growth in WAEMU countries: evidence on the moderating effect of governance

Purpose Fiscal responsibility represents government commitment to prudent financial management, transparent budgeting processes and sustainable public finance through disciplined revenue collection and expenditure control mechanisms. This research aims to examine Mauritius’s deteriorating fiscal position, where public debt increased from 59% to 87% of gross domestic product between 2015 and 2021, raising fundamental questions about long-term sustainability. Design/methodology/approach Through systematic doctrinal and comparative analysis of 11 carefully selected jurisdictions, examining official government documents, International Monetary Fund reports and Organization for Economic Co-operation and Development databases collected between January and September 2025, this study identifies three distinct fiscal framework models with varying effectiveness. Principles-based systems demonstrate superior crisis adaptability while rules-based frameworks achieve higher compliance rates when supported by strong enforcement mechanisms. Findings The research reveals that countries with independent fiscal councils experience average fiscal balance improvements of two point three percent of gross domestic product over five years. For Mauritius, establishing a comprehensive Fiscal Responsibility Act with an independent Fiscal Council requiring Rs 75m annual investment could reduce debt-to-gross domestic product ratio by 15 percentage points over five years while generating savings of Rs 400m–Rs 800m annually through reduced borrowing costs. Originality/value To the best of the authors’ knowledge, this study provides the first comprehensive comparative legal analysis of fiscal frameworks specifically tailored to small Island developing states contexts bridging fiscal law and development economics through actionable recommendations that balance oversight stringency with necessary flexibility.

This study conducts quasi-natural experiment based on local government debt governance launched in China in 2015. Employing a progressive difference-in-differences (DID) approach, this study matches data from Chinese-listed enterprises from 2010 to 2019 to evaluate the effect of the local government debt governance on enterprise green transformation. Findings indicate that debt governance significantly promotes the green transformation of enterprises. This conclusion remains robust after multiple robustness tests. Mechanism analysis reveals that debt governance enables the green transformation of enterprises by alleviating overcapacity. Heterogeneity analysis shows that debt governance significantly promotes the green transformation of enterprises in cities with advanced industrial structures, environmental priorities, non-resource-based economies, and among non-state-owned and technology-intensive enterprises. This study offers valuable insights for countries managing public debt while promoting green transformation among enterprises.

This study aims to analyze the relationship between public debt and fiscal sustainability in Iraq during the period (2004–2023), considering the economic and financial fluctuations experienced by the Iraqi economy as a rentier economy that relies heavily on oil revenues. The study adopts a quantitative approach using annual time-series data, alongside a descriptive-analytical approach to interpret financial and economic developments. The Autoregressive Distributed Lag (ARDL) methodology was employed after verifying the properties of the time series using the Augmented Dickey–Fuller (ADF) test. The results of the bounds testing approach indicated the existence of a long-run equilibrium relationship between public debt and oil revenues, non-oil revenues, gross domestic product (GDP), and the general budget deficit. The results of the error correction model further showed that short-run disequilibria in public debt are rapidly adjusted toward the long-run equilibrium. The study concludes that the continued reliance on oil revenues and the high level of fiscal deficits constitute two main factors contributing to the exacerbation of public debt, thereby constraining the achievement of genuine fiscal sustainability. Accordingly, the study recommends diversifying revenue sources, strengthening fiscal discipline, and adopting an effective public debt management strategy that supports long-term financial stability.

This paper introduces a novel application of the Updated Okun Method to estimate fiscal multipliers. By leveraging Okun's Law to compute potential output and the output gap, we construct a new measure of the fiscal stance that improves transparency and interpretability. Applying this approach to France and Italy, we find that both economies were operating below full potential for most of the sample period, and that fiscal policy was more contractionary than standard estimates suggest. Our analysis reveals significant differences in fiscal multiplier effects across the two countries, with evidence of state-dependence in France, where fiscal policy is more effective during periods of economic slack, while no such variation is observed for Italy. These findings underscore the importance of aligning fiscal policy with economic conditions, particularly in the context of public debt sustainability debates.

Purpose The main objective of this study is to investigate the determinants of net government expenditure of selected “22 Indian States” and public debt from the period 1991 to 2023. The study also examines the comparative effect of central transfers between India's special category states (SCS) and general category states (GCS). Design/methodology/approach This study employs several Cross-Sectional Dependency (CSD) tests for the homogeneity of the sample units. To account the CSD among the units, the study employs the second-generation CIPS unit root test for the stationarity process of the variables. The Kao and Pedroni cointegration are employed to test the long-run cointegration of the variables. Finally, for the result estimation, the highly celebrated autoregressive distributed lag (ARDL) in the panel framework is employed along with the cross-sectional-ARDL, fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) estimator in the robustness analysis. Findings These results demonstrate that all the determinants contribute to net government expenditure positively both in the short and in the long run are able to vary in statistical significance. Moreover, the study results show that central transfer's effect is much higher in the SCS than in the GCS. Research limitations/implications Although the study's emphasis on 24 Indian states may seem selective, the sample was selected to guarantee data availability and comparability over time. These states represent a diverse mix in terms of economic structure, development levels and policy environments, thereby providing a meaningful basis for analysis. However, the findings may not be entirely generalizable to all Indian states or Union Territories. Future research could expand the sample to include additional states or extend the analysis to more recent time periods, subject to data availability. Such extensions would enhance the robustness and external validity of the conclusions drawn in this study. Moreover, this study focuses on quantitative analysis, future work could incorporate qualitative methods such as state-level case studies or stakeholder interviews to further illuminate the mechanisms behind observed fiscal behaviour. Originality/value To the best of our awareness, this investigation represents the initial effort to explore the primary determinants of net government spending in India at the state level. Exploring the comparative effectiveness of central transfers in SCS and GCS further contributes to the study's novelty.

This article examines how fiscal constraints influence the development of contemporary industrial policy, with a focus on European initiatives to encourage green growth and sustainability. Due to high debt levels and the EU’s strict fiscal regime, governments are turning to off-balance-sheet financial instruments to enable investment without formally increasing public debt. Consequently, off-balance-sheet policies broaden the scope of fiscal capacity beyond the traditional realms of taxation and spending. I argue that the successful design of such policies requires intricate technical considerations and thus depends on the formation of “techno-political coalitions”: alliances combining technical expertise and political influence to clarify and navigate Europe’s fiscal and statistical rules. This article explores this phenomenon through the case study of energy performance contracts, creative instruments that facilitate the off-balance-sheet financing of building renovations. By bridging the gap between industrial policy scholarship and critical finance theory, the article demonstrates that contemporary industrial policy is not only concerned with directing public investment, but also with managing liabilities in ways that reshape fiscal capacity within the confines of strict fiscal constraints.

This study investigates the effects of domestic debt, external debt, economic activity, and exchange rate fluctuations on Uganda’s trade performance over the period 1980–2023, using an Autoregressive Distributed Lag (ARDL) model. Inflation and interest rate are controlled for to account for macroeconomic stability factors that could otherwise distort the relationship. A quantitative time-series approach was employed to capture both short-run fluctuations and long-run trends, allowing for the assessment of dynamic interactions among the variables. Annual data were sourced from the World Bank’s World Development Indicators (trade performance, external debt, GDP), Mohamud Ali Abdi (2021) (domestic debt and interest rates), IndexMundi (2024) (exchange rate), and WorldData.info (2024) (inflation). The ARDL model was statistically significant at the 5% level (Prob > F = 0.0204), with an R-squared of 0.3827 and an adjusted R-squared of 0.2476, indicating moderate explanatory power. Domestic debt positively and marginally significantly influenced trade, with a 1% increase associated with a 0.96% rise in trade performance, reflecting the potential of domestically mobilized resources to support trade-enhancing investments. External debt and GDP growth showed no significant effect, suggesting limited short- or long-term influence on trade, while exchange rate depreciation negatively and significantly affected trade, with a 1% depreciation reducing trade performance by 0.205%. Model diagnostics confirmed stability, normality, absence of autocorrelation, and homoscedasticity, supporting the robustness of the estimates. The findings underscore the need for efficient management of domestic debt, promotion of growth in tradeable sectors, diversification of exports, and exchange rate stabilization to strengthen sustainable trade performance in Uganda.