Dealing with the Public Debt Burden. A system dynamics approach to implementing sustainable financial policies in the Italian State

Risultato della ricerca: Otherpeer review

Abstract

In the last decades in several mature democracies the problem of debt emerged as aviolation of intergenerational equal treatment due to high expenditures concentrationand dilution of costs by mean of debt creation. So far this issue has been analyzed froma statistical and a socio-economic perspective, which identified the high politicalinterference as the main dysfunction of country debt management. There are no studieswhich frame the issue by focusing on State institutions as performance-orientedorganizations, according to this perspective such organizations have to respectdynamically trade-off between development and the debt reduction through a mix oflevers such as: funds acquisition/reduction, interest rate and financial leverage. Systemdynamics can be successfully used as an instrument to support Government in keepingcontrol over the key variables affecting debt changes and implementing a sustainablepolicy. In the paper three kinds of policies are recommended: the reduction of expensesand increase of receipts in the short term to drastically reduce the debt amount; theopportunity to exploit the financial leverage in the long term. Such approach implies achange of perspective, looking at Italy as a performance-oriented organization in whicha proper financial management serves economic development and not vice versa.
Lingua originaleEnglish
Numero di pagine0
Stato di pubblicazionePublished - 2012

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