The Consequences of Rising Bulgarian Government Debt and the Search of Growth in Eastern Europe

摘要

In this paper we analyze the dynamics of Bulgarian government debt and its effect on national economy and growth projections. Historically increase of debt has been seen as a fast lane toward higher economic growth. Short term results in Bulgaria however indicate that increasing the debt ratio does not lead to significant rise in GDP and is not supporting a sustainable economic growth. We use stochastic processes to simulate debt changes in order to demonstrate differences in debt policies and stress on short- and long-term effects of budget deficits.