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Public debt plays a major role in financing projects that support economic growth and sustainable development. As governments may choose between domestic and external borrowing, a comprehensive assessment of their effects would support this choice. Our study provides an integrative view of economic and social outcomes and compares, through externalities, the impacts of external and domestic public debt as methods of financing development, with a focus on the Cameroonian economy. Utilizing a dynamic computable general equilibrium (CGE) model and a microsimulation analysis, we find that domestic debt has more advantages for Cameroon compared to external debt, as it increases the large-scale economic impact by improving household welfare, boosting GDP growth, and progressively reducing poverty and inequality. It is therefore recommended that the Cameroonian government focus on increasing the use of domestic debt as a method of financing development by implementing policies that support domestic saving and promote the development of domestic debt markets. [ABSTRACT FROM AUTHOR]

The issue of the effects of government interventions, explicitly of the taxes and expenditures of local public authorities, has generated substantial debate over time, and still gives rise to numerous controversies in theory and practice. Following the Keynesian path of reasoning, it is, at least theoretically, admitted that it is possible to influence the socio-economic activities and support for economic growth by means of government spending, but different other factors act towards enhancing or, on the contrary, impeding the achievement of the desired effects. From this point of view, the delimitation of competences and public expenditure responsibilities between different levels of government raises the issue of some possible different effects of the central and local governments’ interventions. As the macroeconomic stabilization function is usually associated with central governments, and the contribution of local governments often is of lesser importance, less attention is paid to the effectiveness of local administrative actions. In such a context, the paper aims to empirically evaluate the effects of the economic structure of local public expenditures on the local (territorial) economic growth in Romania, over the period 2007 to 2012. The analysis has been conducted at the level of the 42 Romanian counties and on annual data collected from both international and national sources (World Bank, INSSE, The Romanian Ministry of Regional Development and Public Administration).The general method of estimation is the fixed effects estimation technique for panel data models. Our empirical approach is of absolute novelty, especially for Romania, where previous empirical studies have been focusing on the assessment of the overall effects of general government spending. The main findings of our study are that local public expenditures have a negative impact on territorial economic growth, confirmed both for overall expenditures and for various structural components (given the economic structuring of local spending). Striking appears to be the negative impact of the interest payments on local public debt, which calls for the improvement of local government debt management and the selection on the basis of efficiency criteria of local investment projects, in many cases financed by debt issuing. At the same time, the very significant negative impact of social expenditures, currently mandatory expenditures of local governments, draws attention to the need to reconsider public policies and the relationships between different public budgets. Our findings also confirm the unproductive character of local transfer and goods and services expenditures, for which the results are to be interpreted as an alert signal to Romanian local authorities.

The factual, not only formal capacity of local governments to appeal to borrowed resources is, considering the current conditions, a prerequisite for ensuring economic and social development of local communities. In this paper we intend to position the main theoretical and empirical evidences on local governments indebtedness capacity, mainly focusing on its sizing according to Romanian regulatory framework. With respect to previous research, the issue approached is one of great interest as it has not been, in the Romanian literature on local public finances, subject to a separate analysis of proportions. The undertaken analysis comprises a quantitative dimension, based on processed data from the consolidated general budget of Romanian local governments for 2007-2009, in permanent conjunction with monitoring and analysis of the involved qualitative aspects. To ensure the relevance of the research results, the analysis undertaken refers to the legal framework in function throughout the considered period of time, without involving the legislative changes operated in mid-2010. The main conclusions drawn from our analysis indicate that, considering the current Romanian socio-economic environment, under the impact of specific factors of different nature, the legal indebtedness capacity is far from being well valued, thus bringing its benefits to local communities development. This conclusion is valid from a global perspective as well as for different types of local communities. This appears to be inconsistent with the permanently claimed need to fund important local public investments, mainly in infrastructure, indicating, despite the high legal indebtedness capacity, the lack of factual access to borrowed resources. We suggest, therefore, to introduce the concept of effective indebtedness capacity, the result of a particularized correlation for different local governments between legal indebtedness capacity and the manifestation of several factors with specific action and we intend to contribute, by future research, to its measurement.

Our study aims to quantitatively assess some of the determinants of shadow banking dynamics in 11 European Union (E.U.) countries from Central and Eastern Europe (C.E.E.) over the period 2004–2017. Using panel data estimation techniques and a quarterly data set compiled from several publicly available data sources, we alternatively evaluate the impact of six macroeconomic and financial variables on two dependent variables corresponding to two different measures of the shadow banking sector, namely the broad one (including all non-monetary financial institutions, except insurance corporations and pension funds) and the narrow one (excluding from the above one the investment funds, other than money market funds [M.M.F.]). Our findings confirm that shadow banking is sensitive to overall macroeconomic conditions and that economic growth positively influences the expansion of this segment of the financial sector. In addition, a higher demand for funds from institutional investors, which also reveals a more developed financial system, supports the expansion of the shadow banking sector. Moreover, in a low interest rate environment, the search for yield makes investors turn to shadow banks, while the development of the shadow banking sector is also found to be complementary to the development of the rest of the financial system, in particular, traditional banks. [ABSTRACT FROM AUTHOR]

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The aim of our paper is to empirically investigate the impact of the changes in macroeconomic environment on the financial soundness of the banking sector (as measured by bank Z-score) in 11 Central and Eastern European countries, over the period 2000-2014. The results of our empirical study indicate that the financial soundness of the banking sector in our sample countries is heavily influenced by unemployment and inflation rates, foreign exchange rate, current account balance, public debt, and financial depth. Overall, our study underlines the crucial importance of ensuring a healthy and sound macroeconomic environment for the financial soundness of banks. Also, our research highlights that, out of all the macroeconomic factors analyzed, the dynamics of bank credit to the private sector is the main risk factor for the soundness of the banking sector in CEE countries, which calls for its rigorous monitoring. [ABSTRACT FROM AUTHOR]

The paper analyzes the municipal debt of Romanian subnational governments and its effects on the economic development of local communities, especially focusing on the particularities of local indebtedness in the context of the recent economic and financial crisis. By combining qualitative and quantitative analysis (based on indicators of the level, structure and dynamics of local debt) we seek to identify the sources of malfunction or inconsistencies in public policy making and further provide alternative solutions to eliminate them. Taking into account the particularities of the socio-economic environment and the current socio-political realities of Romania, as a European Union Member State, our assessments are carried out by reference to the developments in the municipal indebtedness of other European countries, developed but also developing ones. The quantitative analysis is based on both national and European regulations and incident databases of national authorities and Eurostat. [ABSTRACT FROM AUTHOR]

The decentralization process was continuous in Romania starting with 1990, generating the implication of local authorities in local public finance, as a result of exclusives, shared and delegate competences and, so, the necessity of ensuring a good management of resources and expenditures. Therefore, the decentralization of competences / responsibilities from State to local governments was a major Romanian political theme and a first rank component of management of local public finance, as main driving instrument for local development. Specific legal framework of local responsibilities is established both to European and national level. Researchers based on regulation and practice have tried to quantify the responsibilities developing different models to measure local revenue and expenditures autonomy. The paper aims is to identify some models for measuring local expenditure autonomy and to apply for Romania. The study is oriented to measure local expenditure autonomy in Romania using Bell, Ebel, Kaiser and Rojchaichainthorn's model. [ABSTRACT FROM AUTHOR]