PUBLIC DEBT DYNAMICS AND POSSIBILITIES FOR ITS PROJECTION – THE CASE OF THE REPUBLIC OF MACEDONIA

Sa？etak In case when an economy of a country is in crisis, the country by indebting itself creates a possibility of taking some investment projects into realization all for the purpose of having them act as stimulators of the economy. Excessive indebting or the irrational use of borrowed funds can have negative consequences for both the domestic economy and the future generations as well. Thus, it is of great significance to determine public debt dynamics and to establish basis for giving projections of its trends in future.The projections about the trends of the economic variables represent very complex operations. For the purpose of making such projections, the economics relies on econometric modeling. These projections are further subjected to additional practical and theoretical processing all for the purpose of obtaining as relevant and as precise results as possible. The research gives a detailed analysis of the public debt dynamics and its structure in the Republic of Macedonia for a period of 16 years. Then, a close inspection is given to the way certain factors influence the public debt in order to project its trend in the future by making use of an econometric model. The projections obtained in this manner can further represent a basis for further decision-making on behalf of the fiscal policy makers in the country