Determinants of Debt Limits in Local Governments: Case of Poland

AbstractThe paper aims at presenting both determinants and applied approaches of debt limits in local governments. There are especially characterized practices introduced in Poland in this field after 1990. Thus, significance of some economic and financial variables, which affected the debt ratio growth of local governments in Poland between 1995 and 2013, was verified. The estimated regression models imply that growth of share of the debt in the revenues was significantly affected by the financial situation in the public finance sector and in the local government sector as well as by the cost of capital there. Hence, the ability of incurring the debt could be reliant on the fiscal variables and calculated individually, as it has been introduced in Poland since 2014