While the significance of having stable finance system is important to the most countries of the world, small open
economies should be extra concerned about the government debt stability issues due to their dependence on the
global economy (Agliardi et al., 2012; Jeanne & Ranciere, 2011; Pisani, 2011; Cuadra & Sapriza, 2008; Damijan,
2001). Governments of such economies should be more conscious of the threat of stochastic nature of the economy
and risks caused by it. Therefore, even more reserved strategy (in comparison with the strategy of big open
economy) of the government borrowing should be considered.
While the significance of having stable finance system is important to the most countries of the world, small openeconomies should be extra concerned about the government debt stability issues due to their dependence on theglobal economy (Agliardi et al., 2012; Jeanne & Ranciere, 2011; Pisani, 2011; Cuadra & Sapriza, 2008; Damijan,2001). Governments of such economies should be more conscious of the threat of stochastic nature of the economyand risks caused by it. Therefore, even more reserved strategy (in comparison with the strategy of big openeconomy) of the government borrowing should be considered.
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