Public debt in contemporary market economies

The operation of the public sector and its specific character bring about certain consequences for the market orientated economy. The impact of this sector on the real sphere (the allocationredistributive function) and the regulation sphere (the stabilisation function) determines the amount of public expenditure, which is related with the activities of the public sector agencies. In consequence of the state's need for resources designated to cover the needs of this sector the public budget deficit appears on the scene. The public debt policy depends on the model of market economy of a given state and its specific economic and social conditions. These differences can be perceived while analysing empirical data which determine: the amount of public debt, budget deficit and costs of its servicing. The situation of budgetary disequilibrium tends to make the government agencies to look for additional sources of budget revenue. One of principal means used to reduce the negative budget balance is the drawing of public loans (producing the so-called public debt). There is a close relationship between the public debt and the budget deficit, this relationship directly determines the level of government revenue and spending. The highly developed countries start to perceive the need to limit both the public debt and the budget deficit. An example confirming the above question are the stipulations of the Maastricht Treaty concerning the countries of the European Union which intend to develop the common monetary system. According to those stipulations the public debt should not exceed 60% of the GDP and the budget deficit 3% of the GDP. In spite of observable disproportions in the scope of public loans among particular OECD countries, a continuous growth m public debt and costs of its servicing has to be noted. Public debt tends to positively influence the level of general business activity in the short run only. The results of research concerning the relationship between the level of public spending (determined indirectly by the level of public debt) and economic growth tend to suggest that m the whole economy of particular countries long term, negative outcomes resulting from growing public spending become more and more visible. Among the principal dangers, that the public debt may engender either directly or indirectly it is possible to list the following: the crowding out effect, instability of public finance, unemployment, shifting of the burden of repayment of public debt to later periods with all its consequences (the possibility of an increase in tax charges), the danger of drawing loans intended for repayment of liabilities resulting from "former" indebtedness. According to the former considerations, the economic policy should be confined to the reduction of public debt and budget deficit. Basic activities, which could regulate the above problem could be boiled down to the following elements: limitation of the role of the state in economy, reduction of public spending, reduction of public administration, determination of the acceptable limits of government deficit and public indebtedness (which do not bring about negative impact on the economy - the Maastricht Treaty).Digitalizacja i deponowanie archiwalnych zeszytów RPEiS sfinansowane przez MNiSW w ramach realizacji umowy nr 541/P-DUN/201