The paper ambitions to discover the dynamics among additives of public expenditure and public debt the usage of an intertemporal optimization framework. Public expenditure is classed as efficient and lessefficient primarily based totally at the reason that a share of the efficient public expenditure corrects disequilibrium withinside the public debt withinside the lengthy-run. The second-order situations as a result of the version reveal that as phi increases, the marginal social fee of a unit of capital reduces. Thus, past its most efficient level, an growth in phi may want to nevertheless have an effect on public debt inversely; however, this can be on the fee of `crowding out` of personal funding. To take a look at the theoretical illustration and to examine the connection among public expenditure and debt, an empirical evaluation the usage of Greek and Romanian Public Finance data (2019-2023) is completed on this study. Time collection strategies are hired to check the speculation that capital expenditure of the authorities is efficient public expenditure. Public spending is a fundamental instrument of fiscal policy, with a direct impact on economic growth, fiscal balance and the quality of public services. This comparative study analyses the level, structure and dynamics of public spending in Romania and Greece, two European economies with different trajectories but facing similar challenges related to the efficient use of public funds. Based on statistical data from the last two decades, the research emphasises the differences and similarities in the allocation of budgetary resources, with a focus on spending on public administration, education, health, investment and public debt service. Economic, political and institutional factors influencing budgetary decisions in the two countries are also analysed. The study provides an integrated perspective on how Romania and Greece are responding through public expenditure policies to social and economic pressures, while drawing conclusions and recommendations on the sustainability and efficiency of spending in the context of EU membership. The originality of the article lies in the fact that the research targeted by this has an applied importance, given that the information necessary to correlate empirical data with the hypotheses launched within the research and may be beneficial for a future accounting analysis in the case of the two Balkan states. The intention of this theoretical exploration is to recognize the dynamics of efficient public expenditure with the extent of public debt in mild of the intake and funding alternatives of the consultant agent withinside the economy.
Dobre et al. (2025) studied this question.