Analysis of Public Debt at Subnational Government Levels: Evidence from Cantons in the Federation of Bosnia and Herzegovina

Halebić Jasmin () and Moćević Amina ()
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Halebić Jasmin: Associate professor, Faculty of Economics, University of Zenica
Moćević Amina: PhD student, Ministry of Finance Canton Sarajevo

South East European Journal of Economics and Business, 2020, vol. 15, issue 2, 109-123

Abstract: Total public debt of ten cantons in the Federation of Bosnia and Herzegovina (FBiH), one of the two entities in BiH, have substantially increased in recent years. Since it is relatively small in nominal terms, this galloping trend have not attracted enough attention of decision makers. If these developments continue in the future, the public debt at cantonal level in FBiH might create serious fiscal problems and become one of central issues for policy makers. This has motivated our investigation of determinants that caused the increase in public debt over the period 2012-2018.We apply a panel regression analysis and investigate how budget deficit, trade balance, unemployment rate, size of population and institutional changes affect public debt. We find that public debt is positively associated with budget deficit but negatively associated with trade balance, the size of population and institutional changes. These findings motivated policy recommendations presented in the paper.

Keywords: public debt; Federation of Bosnia and Herzegovina; subnational governments (search for similar items in EconPapers)
JEL-codes: H68 H74 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:seejeb:v:15:y:2020:i:2:p:109-123:n:9

DOI: 10.2478/jeb-2020-0019

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