STUDY ON THE IMPACT OF LOCAL PUBLIC DEBT ON THE TOTAL PUBLIC DEBT AT EU LEVEL

Abstract

Local public debt and total public debt exert a significant influence on the financial sustainability of the public budgets. The impact of the local public debt on the total public debt is little addressed in the published literature, these two indicators being rather treated individually or in relation to other influencing factors. This study starts from the research hypothesis that supports a weak or non-existent financial dependence between the local public debt and the total public debt at the level of the EU states. In a first stage, the influence of DPL on DPT was analyzed for Sweden, Denmark and Finland, being states with high financial autonomy, in opposition to states showing low financial autonomy and high financial dependence on national governments, such as Romania, France. A second part of the study focused on the impact of DPL on DPT at the level of EU member states. The statistical methods used, namely the simple linear regression carried out at the EU level, show that there is no statistical link between the increase in local public debt and the total public debt.

Keywords

• local public debt
• total public debt
• financial autonomy
• decentralization