Microeconomic Effects of Growing Public Debt on the Russian Economy

Abstract

Th e paper represents a complex analysis of public debt as one of the major tools of microeconomic policy, through which a modern state can directly or indirectly aff ect the condition and development of the national economy.Th e analysis results are given for modern concepts explaining how the amount of public debt aff ects microeconomic development. It is shown that a growing public debt may cause both a positive and a negative eff ect on microeconomic processes, which makes it possible to reach a conclusion about the contradictory character of debt funding the economy.Th e essence and nature of the Russian Federation's public debt is revealed as an important component of the Russian economy's operating mechanism at the present time.Th e RF public debt dynamics are presented and projected values of its growth are given for the years 2016-2018.A brief description of the characteristics of RF debt policy is provided. It is noted that one of its objectives for the next few years is the need to adapt to the changing conditions in the external and domestic fi nancial markets.One hazard of growing public debt is identifi ed given the structural misbalances and external economic shocks, since it may result in a bigger dependence of the national economy on external and internal borrowings, which, in turn, will provoke additional risks for the development of the Russian economy.It is shown that in the countries with developing markets, growing public borrowings may cause negative macroeconomic consequences. It is proven that in order to enhance the stimulating eff ect of public debt on the macroeconomic processes the state needs to develop an effi cient debt strategy, which would clearly defi ne the economic boundaries of public debt use.