Municipal Debt and Its Economic Effects – The Romanian Case

Abstract

The paper analyzes the municipal debt of Romanian subnational governments and its effects onthe economic development of local communities, especially focusing on the particularities of localindebtedness in the context of the recent economic and financial crisis. By combining qualitativeand 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 andfurther provide alternative solutions to eliminate them. Taking into account the particularities of the socio-economic environment and the currentsocio-political realities of Romania, as a European Union Member State, our assessments arecarried out by reference to the developments in the municipal indebtedness of other Europeancountries, developed but also developing ones. The quantitative analysis is based on both nationaland European regulations and incident databases of national authorities and Eurostat.

Keywords

• municipal indebtedness
• local guarantees
• subnational governments
• economic growth and development