Search results

Here in the beginning of 2021, two of the truly relevant federal public finance issues are presented in this article. One is the Debt-to GDP Ratio. The second topic is the true nature of deficits, surpluses and future liabilities treated in budgets constructed via the Unified Budget Act. Two graphs on these issues are included. This article shows that the present Debt-to-GDP ratio is relatively high, as if the nation similar to when the United States was in a period of a major war. This graph is shown in this article's Figure 1. There has been evidence in the macroeconomic literature that indicates a high Debt-to-GDP ratio can possibly result in some degree of slowed economic growth. Though the literature is varied on that point. The reason for the possible crowding out effect has to do with the competition for loanable funds. There is competition from both the public and private demanders of those loanable funds. Furthermore, there is the reality that all federal trust fund balances of the United States must be used to hold U.S. Treasury bonds. For figure 2, two categories on U.S trust funds are shown. One category is the combined total of Social Security. Medicare, Disability and related funds. This is shown in a red line. All the other federal trust funds are indicated in a blue line. There is a graph that shows these two lines. The graph is of the percentage share between the two categories. As a result, the red and blue lines are inverse functions of each other. Over the eighty-year period (1940-2020), there has been variation if both the red and blue lines. The goal of this articles is for leaders and government analysts to be more aware of the issues of the USA Federal Debt to GDP Ratio and the Unified Budget Act's lack of Generally Accepted Accounting Principles.

Statutory tax rates of a country do not reflect a country's true tax competitiveness, we propose and show that government debt to GDP ratio (GOVDEBT) of a country is a better proxy for its tax competitiveness. Using a comprehensive sample of 1,884 completed cross-border acquisition transactions from the U.S. to other OECD countries, we document that the U.S.- target country GOVDEBT difference is significantly and positively related to both deal announcement return and post-deal tax saving of the acquirer. The GOVDEBT difference is also significantly and positively related to U.S.-target country deal flow. The findings remain robust when we control for the potential endogeneity of GOVDEBT difference. Our findings strongly suggest that tax avoidance is an important driver of U.S.-OECD cross-border deal flow and it increases shareholder wealth for U.S. acquirers.

The paper addresses a topical issue – how expansionary fiscal policy affects the debt to GDP ratio. It examines whether the projected future economic growth (stimulated by government spending) is sustained with the resulting national debt. It is discussedif government investment in infrastructure is an effective approach to boost the economy in times of economic downturn. The authors develop the debt to GDP ratio dynamics model and perform a series of simulations (based on US data) to forecast the evolution of the debt to GDP ratio over a 10-year horizon. It is shown that for the data characterizing the current state of the U.S. economy the government investment in infrastructure cannot decrease the debt to GDP ratio.

Theoretical background: The growth in government borrowing, carried out in connection with the banks' capitalisation, significantly increased the state budget expenditures aimed at servicing the capitalisation domestic public debt, which reinforces the general tendency regarding the exacerbation of the budget risk in the debt sphere in Ukraine. A weighty debt-creating factor was the budget deficit, which was covered by borrowing. Proceeding ahead of the rate of increase in debt volumes in comparison with gross domestic product (GDP) growth rates under the influence of internal and external destabilising factors contributed to the excess of the debt levels security indicators and increased the insolvency risk of the state. The increase of the obligations share denominated in foreign currency or linked to the exchange rate in the overall debt structure as an important indicator of the financial system's vulnerability to exchange rate fluctuations creates additional threats to debt sustainability regarding the increasing currency risk and the national currency devaluation.Purpose of the article: The article is focused on studying the dynamics and structure of Ukraine's public debt, its ratio to GDP, and an empirical analysis of the relationship between public debt (external and domestic) and economic growth in Ukraine.Research methods: To empirically test the relationship between public debt and economic growth in Ukraine over the 1992 to 2018 period, multiple regression models were conducted. A real GDP per capita was used as an indicator for economic growth and the debt-to-GDP ratio was used as an index of public debt. Research hypotheses were the following: H1: The public external debt-to-GDP ratio and GDP per capita have a strong negative and statistically relevant correlation; H2: The public domestic debt-to-GDP ratio and GDP per capita have a strong negative and statistically relevant correlation.Main findings: Examining the dynamics and structure of Ukraine's public debt by borrowing market (external and domestic), it is concluded that there is no strong negative or positive statistically relevant correlation between the public debt-to-GDP ratio and GDP per capita for Ukraine. The impact of this factor is so insignificant that it encourages further research to verify that low GDP growth rate causes the increase in Ukraine's public debt. ; Theoretical background: The growth in government borrowing, carried out in connection with the banks' capitalisation, significantly increased the state budget expenditures aimed at servicing the capitalisation domestic public debt, which reinforces the general tendency regarding the exacerbation of the budget risk in the debt sphere in Ukraine. A weighty debt-creating factor was the budget deficit, which was covered by borrowing. Proceeding ahead of the rate of increase in debt volumes in comparison with gross domestic product (GDP) growth rates under the influence of internal and external destabilising factors contributed to the excess of the debt levels security indicators and increased the insolvency risk of the state. The increase of the obligations share denominated in foreign currency or linked to the exchange rate in the overall debt structure as an important indicator of the financial system's vulnerability to exchange rate fluctuations creates additional threats to debt sustainability regarding the increasing currency risk and the national currency devaluation.Purpose of the article: The article is focused on studying the dynamics and structure of Ukraine's public debt, its ratio to GDP, and an empirical analysis of the relationship between public debt (external and domestic) and economic growth in Ukraine.Research methods: To empirically test the relationship between public debt and economic growth in Ukraine over the 1992 to 2018 period, multiple regression models were conducted. A real GDP per capita was used as an indicator for economic growth and the debt-to-GDP ratio was used as an index of public debt. Research hypotheses were the following: H1: The public external debt-to-GDP ratio and GDP per capita have a strong negative and statistically relevant correlation; H2: The public domestic debt-to-GDP ratio and GDP per capita have a strong negative and statistically relevant correlation.Main findings: Examining the dynamics and structure of Ukraine's public debt by borrowing market (external and domestic), it is concluded that there is no strong negative or positive statistically relevant correlation between the public debt-to-GDP ratio and GDP per capita for Ukraine. The impact of this factor is so insignificant that it encourages further research to verify that low GDP growth rate causes the increase in Ukraine's public debt.