Assessment of Public Debt Drivers in the Balkans

Kevin Bica and Erinda Imeraj
Additional contact information
Kevin Bica: Beder University College, Tirana, Albania
Erinda Imeraj: Epoka University, Tirana, Albania

Journal of Financial Studies, 2024, vol. 16, issue 9, 52-67

Abstract: This study investigates the main drivers of public debt and assesses the overall debt structure in the Balkan countries. Regardless of a close to 50% average debt level, there is no immediate threat of escalation compared to developed countries. The empirical analysis leverages three advanced econometric techniques to control for cross-country specifics and potential biases due to data disruptions. Sourced from the World Bank and the International Monetary Fund, the data are of quantitative type collected from 2000-2021. Empirical evidence suggests that Real GDP Growth and Current Account balance are crucial determinants of economic performance, with political regimes also exerting a notable influence. As the time frame of the research consists of the COVID-19 pandemic, it is essential to consider structural breakdowns to avoid any coefficient biases. Unsurprisingly, the dummy variable COVID-19 depicts a significant effect as public debt increased by 2.51 percentage points once the pandemic occurred. The rest of the variables, including interest rates, government expenditure, and unemployment rate, are statistically insignificant. Empirical evidence from the present study supports the hypothesis that pursuing genuine economic development through the advocacy of domestic production and trade, coupled with the consolidation of democratic institutions, can act as a check on the spiraling growth of public debt.

Keywords: Public debt; Economic Growth; COVID-19; Panel Data; Inflation; Balkans. (search for similar items in EconPapers)
JEL-codes: E02 E12 E62 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://revista.isfin.ro/wp-content/uploads/2024/05/4.-Kevin-Bica-et..pdf (application/pdf)
https://revista.isfin.ro/2024/05/25/assessment-of- ... vers-in-the-balkans/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fst:rfsisf:v:16:y:2024:i:9:p:52-67

DOI: 10.55654/JFS.2024.9.16.04

Access Statistics for this article

Journal of Financial Studies is currently edited by Raluca Ladaru

More articles in Journal of Financial Studies from Institute of Financial Studies Contact information at EDIRC.
Bibliographic data for series maintained by Cosmin Catalin Olteanu ().