Public debt management and private financial development

Silvia Pedersoli and Andrea Presbitero

Economic Systems, 2023, vol. 47, issue 1

Abstract: In several developing countries, high and rising public debt is an important source of vulnerability. Strengthening debt management is a priority, but its effects on domestic economies have been hardly analyzed. This paper asks whether better public debt management could have spillover effects on the private sector, leading to more (and more stable) private capital flows and domestic credit. This is a relevant question in a context of financial deepening and increasing private capital inflows, which could be prone to episodes of bonanza, sudden stops and crises. Our results, based on a sample of developing countries, show positive spillover effects from better public debt management to private capital inflows and domestic financial deepening.

Keywords: Public debt; Debt management; Private credit; Financial development; Capital flows (search for similar items in EconPapers)
JEL-codes: F34 H63 O40 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:47:y:2023:i:1:s0939362522000723

DOI: 10.1016/j.ecosys.2022.101010

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