Personal finances and state debt policy: characteristics and interrelationships

Abstract

The article examines the relationship between household finances and the state’s debt policy in the context of transforming household savings into domestic sources of public debt financing. The purpose of the study is to identify the nature and strength of this relationship based on an analysis of the dynamics and structure of household savings attracted through domestic government bonds, as well as to assess their impact on the formation of domestic public debt and state budget expenditures on debt servicing. The relevance of the study is due to limited availability of comprehensive statistical data on household savings and the growing role of domestic borrowing under conditions of economic instability. The methodological framework of the study is based on a combination of general scientific and special methods, including analysis and synthesis, induction and deduction, statistical and time-series analysis, structural and comparative methods, as well as elements of correlation and regression analysis and the estimation of elasticity coefficients. The application of a systemic approach enabled a comprehensive assessment of the interaction between household finances and public debt processes at the macroeconomic level. The results indicate a steady increase in both the volume and share of domestic government bonds held by households, confirming the gradual strengthening of their role in the structure of domestic public debt. The study finds that the currency composition of government bonds has shifted towards an increased share of instruments denominated in the national currency, contributing to a reduction in currency-related debt risks. The analysis of public debt dynamics reveals its significant growth under the influence of crisis shocks, while the estimated elasticity of domestic public debt with respect to household investments in government bonds demonstrates a heterogeneous impact of household savings on debt processes. A strong statistical relationship is identified between the volume of government bonds held by households and state budget expenditures on debt servicing, indicating increased fiscal sensitivity to domestic borrowing. The study concludes that household savings mobilized through domestic government bonds (OVDP) constitute an important component of the state’s debt policy, while requiring prudent use in view of their long-term fiscal implications. The findings may be applied in the formulation of state debt management strategies and in further research on the integration of household finances into the public finance system.