engleski

The influence of an excessive public debt on the economic trends in the Republic of Croatia

Lately, the problem of a public debt takes place as a central macroeconomic question. The level of public debt of the Republic of Croatia, and especially the dynamics of its growth, indicates a troublesome situation in the system of public finances. The instability of the financial system and the increase in government spending have been manifested in the strengthening of the state debt borrowing increase, whose sources of funding are already largely limited due to the financial crisis. With the goal of settling incoming debts and stabilizing the system, the economy is turning to borrowing either on the domestic or foreign markets. Previous and current situation in the Republic of Croatia suggests the existence of excessive macroeconomic imbalances caused largely by the existence of excessive levels of public debt and the profound financial crisis, which ultimately reflected on the system of the public finances. Therefore, there is a need for applying special policies and strategies for managing public debt that would lead to stabilization of state indebtedness using tailored measures on the financial market. This paper deals with the impact of public debt on the economy of the Republic of Croatia, as well as the possible measures of stabilization of the system. Given the former research, the emphasis is placed on the oscillating path of public debt growth and the budget deficit, as well as the consequences of such negative movements have on the economy. The conclusion that is to be drawn is that every measure of stabilization of the system has its positive and negative effect on the economy. What consequences will prevail primarily depends on a combination of measures that will apply economic policy makers.

public debt, government deficits, GDP, stabilization measures, sustainability

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