One of the concepts that came to the forefront in struggle and exit strategies out of the Global Crisis 2008 is policy space. Policy space can be defined as budgetary resources which can be used for a particular aim without effecting the states public position or stability negatively. It can also be defined as the difference between current debt level and debt ceiling. Increase of debt level can hinder policy autonomy of countries. In connection with development level of country, structural problems and matters related with crisis narrow policy space and prevent debt sustainability. Besides, decrease in debt sustainability also cause policy space to narrow. In this article, the vice versa relationship between narrowing of policy space and debt sustainability is handled with aspects of sovereignty and efficiency in application of public policies. Contingent claim liabilities are going to be examined in order to analyze how state would be affected in case private sector comes to an impasse.
Key words: Fiscal space, policy space, fiscal policy sovereignty, fiscal risk, balance sheet approach. JEL Classification: H60, H63, H74 Article Language: EnglishTurkish
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