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Information asymmetry in genetic farming

The paper examines a new rent-genetic direction in the development of earth science and the risks of information asymmetry of its current manifestation in agriculture. Practical results imply approbation of logical and mathematical models for implementation of the rent-genetic approach to regulation of land payments that ensure genetic farming development. The study analyzes, evaluates and provides socio-economic substantiation of rental regulators of genetic farming based on activation of genetic factors through the example of crop farming in Leningrad region. Intensive rental income can be ensured in agriculture only in the context of the redistribution of extensive forms of rental income (differential rent I, resource rent, monopoly rent), which is a fundamental condition for creating a competitive environment and investment development in agriculture.

Introduction
The increasing number of disturbed agricultural land in the Russian Federation is a consequence of the impact of information asymmetry on production motives of copyright holders, who promote withdrawal of land from production, which hinders the development of genetic farming and confirms the interdisciplinary nature, scientific and practical significance of the problem under study.
The mechanisms of involving land in the production turnover in the Russian Federation work intermittently. The production workers are faced with the task of not using new lands but preserving the existing ones in production, however, this process is increasingly impeded by market mechanisms that are subject to information asymmetry and cannot be optimized without rent regulators. In these conditions, no highly specialized technological areas can be developed.
1. The features of the development of agriculture in market conditions show that the tendency of land degradation can be decreased through the realization of socio-economic interests related to redistribution of income from land use, which will motivate the rational use of land and eliminate the impact of information asymmetry.
Therefore, the study of economic incentives for development of land cultivation technologies, which include rental income, determines the strategic direction of the development of scientific agriculture at an interdisciplinary level.
Due to fair land payments, the structure of rental income is transformed into technological responsibility to create conditions for investment and environmentally responsible behavior of land users.
Depending on the degree of consistency between the structure of rental income and the system of land payments, which regulate investment demand for land resources, a proportion of factors is formed that generates the structure of the farming system as well.
2. The study of information asymmetry of genetic farming indicates that the rate of change in factor income and, hence, motivation to increase the ecological and technological responsibility of agribusiness entities can be affected through regulation of the structure of rental income.
Global tightening of competition rules increases the scientific significance of the problem of using rental regulators in the development of investment and innovation activity and makes it strategically important. Disruptions in the system of movement of rental income in agribusiness unbalance investment and technological interests and information asymmetry in genetic farming.
Unbalance of investment and technological interests that gives rise to factor contradictions in the farming system is caused by underestimation of the institutions of rent regulation of breeding and genetic processes in agribusiness.
Insufficient development of rental institutions for development of genetic agriculture in the Russian Federation made raw materials and food genetically unsafe, and caused inaction of critical socially significant prevention of transnationalization of the genetic and breeding sphere in the Russian Federation.

Problem statement
The rental methodology of land payments makes it possible to activate the factors of genetic farming development.
1. Complication of the structure of agrarian relations with increased dynamics of the economic and political environment qualitatively changes the structure of rental income, which should be followed by adequate changes in the methodology of rental regulation.
2. The rental methodology of land payments can optimize the process of rent formation to work out mechanisms for development of production technologies and farming systems.

Research problem
The rental theory can be used to develop rental regulators of investment and technological processes in agribusiness.
1. The shift in priorities in land use is caused by the existing structure of rental income in the Russian Federation, in which differential rent II that determines the reasons for rational land use, is replaced by resource and, hence, monopoly rent.
As a result, incentives for the most complete and rational use of agricultural land are lost (figure 1). If the study investigates transformation of land relations for a long-term period, to understand rental categories classical approach should be used, according to which: differential rent II -increase in normal yield due to intensification factors; natural resource rent -an increase in normal yield due to natural and climatic factors. The market price of land is typically determined by economic rent, which is resource rent in the absence of rent regulators, and it devalues agricultural land and motivates rightholders to concentrate resources and monopolize that hampers competition.
Economic rent is an increase in the value of the resource to maintain it within a certain area of activity, which obliges land users to subsidize up to the level of the average yield of natural resources, but this rule cannot be observed in the context of resource rent localization.
A necessary and sufficient condition for transition to the rational land use is redistribution of resource rent and its transformation into socio-economic factors of the development of land relations.
2. Target functions of modern agricultural relations in the Russian Federation cause information asymmetry and give rise to false priorities, as they are aimed at maximizing capital and market dominance that typically occurs at the expense of fair competition.
The criterion for realization of interests in the modern agrarian economy is the amount of capital that ensures increase in the economic rent and constrains maximization of investment interests in subsoil use. This results in surplus and localization of agricultural land resources of average and poorer quality in non-production areas. Economic rent provides an outflow of capital from the real sector to the detriment of investment and innovation strategies of agribusiness development. Depending on the 3 degree of consistency of the structure of rental income, cadastral valuation criteria and payments for natural resources, an investment profile of the agrarian economy development is formed, which needs to be reformatted for socio-economic interests. According to Rosprirodnadzor data for 2017, in the territory of the Russian Federation, the area of land disturbed by various types of work amounted to 25,6242.17 ha [1].
According to the Department of Land Reclamation of the Ministry of Agriculture, about 130 mln ha of agricultural land are degraded.
Every year, 1.5-2 mln ha of land are degraded in the territory of the country, which leads to losses of up to 3.9 mln tons of agricultural products in grain equivalent.
The summary data of Rosreestr on spread of the main negative processes indicates a critical scale of the problem (table 1).

Purpose of study
The study aims to identify rental levers that will eliminate information asymmetry in genetic farming development. To reveal the content of socio-economic institutions for rational land use based on rental income structuring to develop rental principles of genetic farming development and soil potential restoration.
2. To study land relations in terms of the impact of rental institutions on rational land use, including the impact of genetic factors of grain crop samples adapted for Leningrad region on crop yield and soil fertility.

Methodology
The research methodology is based on a systematic approach that employs economic, mathematical and statistical methods.
Within the framework of general rent regulation aimed at formation of technological priorities in land relations, it is proposed to identify genetic rent to maintain a socially oriented vector of genetic farming development.
The method of calculating the differences in normal yields due to genetic factors is used to calculate the genetic rent for grain crops on the example of Leningrad region to provide substantiation of crops adapted to the region, selection decisions and agrotechnical technologies.
1. The solution to the problem of rational land use is related to the rent mechanism of organization of land relations.
A.E. Sagaidak and A.A. Sagaidak developed a modern approach to implementation of the rent mechanism in land management that considers the land rent as the basis for assessing the effectiveness of land consolidation projects in agriculture [2].
The socio-economic component of land management underlies the substantiation of the model of rational land use that is aimed at: -involvement of lands into production turnover and improvement of soil fertility; -prevention of land degradation; -rational land use with increased investment and balanced fertilization; -introduction of high-precision farming technologies to decrease the consumed fuel, seeds and fertilizers; -engineering development of territories. The model of rational land use and the economic barriers to its implementation perform social functions; therefore the socio-economic tasks of modern land management are primarily aimed at solving social issues of reproduction and overcoming interregional socio-economic differentiation.
The dominant social argument for rational land use is the improvement of the spatial basis of the life of society, strengthening the role of land as a means of production.
Socio-economic approaches to substantiating rational land use: 1) Compensation for social and economic damage; 2) Smoothing of socio-economic differentiation; 3) Socio-economic support of anti-erosion resistance and genetic farming development; 4) Reproduction of fertility and gene pool of cultivated plants; Socio-economic development is aimed at transformation of social reproduction. Transformation of social reproduction is complicated by huge differences between individual territories in terms of socio-economic development, which confirms the need to smooth interregional socio-economic differentiation in the countryside by enhancing the investment activity of land rightholders based on rental conditions for genetic farming development [3].
To date, genetic engineering, which is affected by monopoly rent, poses a real threat to land resources and hinders rational land use. Regulation of the structure of rental income can contribute to the development of competition and, accordingly, to strengthening of reproduction processes [4]. Centralization of excess profit intensifies contradiction between industrial democracy and empowerment when the shared power approach is disrupted at the expense of social production and regional competition [5].
2. Farming systems should be focused on a certain yield of agricultural crops in a specific soil and climatic zone, and on the yield increase as individual or combined factors of farming intensification  These systems can be characterized as farming systems of the first, second, etc. levels in relation to the district, region, territory. It is proposed to establish the levels according to the degree of utilization of photosynthetically active radiation (PAR) by plants as inexhaustible source of energy. The interval between these levels can be taken as 0.5% of the PAR utilization factor.
The process of soil formation changes through changes in vegetation. Appropriate combination of anthropogenic factors makes it possible to change the properties of soil and the direction of soil-forming process by changing the biota (agricultural crops most adapted to the soil of cultivated plants).
Developing genetic farming has brought more advanced plant species resistant to various pests and diseases. Farmers had to spend fabulous money on treating fields with harmful herbicides, but plant genetics made it possible to forget about these problems.
Genetics is a theoretical basis for breeding -creating new and improved plant varieties, strains of microorganisms, and animal breeds adapted to certain soil conditions.
Breeding needs a diversity of source material. For this purpose, N.I. Vavilov gathered a collection of cultivated plant species and their wild ancestors from all over the world. N.I. Vavilov established the centers of origin of cultivated plants with the greatest species and varietal diversity of cultivated plants.
By 1940, the collection in All-Union Institute of Plant Industry amounted to 300 thousand samples.
To date, the collection is being replenished and is the basis for work on breeding of any culture.

Results
The proposed method of structuring rental income based on modeling of the normal yield, calculated by the methods of correlation and regression analysis.
1. Current mechanism of land relations is not able to solve the problem of rational land use due to the imbalance in the system of land income distribution.
The object of the study is agricultural land in the Russian Federation, the basis for the socio-economic development of the country, which steadily decreased from 637.7 mln ha in 1990 to 399.9 mln ha in 2010 and 383.2 mln ha in 2018 that confirms the fact of its irrational use.
The rental income distribution mechanisms promote monopolization and thus hamper normal competition. The basic principle for resource income distribution, which motivates rational land use, is the principle of competition. This principle can be implemented only in the institutional environment where the market acquires a competitive basis and a socially oriented nature.
The resource distribution criterion determines the rules for economic entities and, accordingly, the balance of competitive forces, which ultimately transforms into a certain form of competition and the model of land relations. Decreased rights and opportunities hampers competition and distortion of incentive mechanisms for labor in the real sector [6].
Therefore, substantiation of socio-economic institutions for rational land use is based on structuring of rental income and development of rental principles for genetic farming development that ensures restoration of soil potential.
Rental institutions formed by technological factors, including zonal genetic properties of cultivated plants, contribute to rational land use, subject to the socio-economic structuring and rental income distribution.
The study aimed to determine the rental approach to classification of the factors of the farming system modernization. The factors, being elements of economic potential, facilitate creation of a certain type of rent (table 3).
The resource potential that determines the source of formation of genetic rent is represented by genetic and social factors.
The production potential is a converted form of profit and differential rent II, which, in turn, indicates the cost of factors for modernization of land relations.
Socio-economic infrastructure creates relative advantages and is a converted form of differential rent II. The socio-economic value of land is formed by the rent mechanism, which is the basis for using rental approaches in the study. The management system is capable of maintaining equal competitive conditions only within a certain range, but market forces, as a rule, counteract this, shifting the structure of rental income into an asymmetric zone [7]. 6.2. Methodological techniques were developed to identify genetic rent that contributes to rational land use, which is the novelty of the study.
The study showed that rent regulation of land relations is reduced to socialization of differential rent I (natural resource rent) through the land tax and its use to create socio-economic infrastructure.
Differential rent II and its forms, including genetic rent, are institutions for rational land use. The problem of a long-term imbalance between production, genetic and social factors is due to the structure of rental income and its transformations in short-term dynamics.
Therefore, it is necessary to study the process of rent formation, to identify and assess the structure of rental income, and to develop rent-oriented institutions for genetic farming development, restoration of soil potential and fertility.
To do this, the crop yield is determined first (Y with a minimum of all diagnostic characteristics (Y min), as a base value for comparison for each calculated Y (Y calc).
Y calc 1 is then determined for each type of sample, while X1 takes its value for a certain sample, and all other values of X remain unchanged as they were at Y min. Y calc 2,3,4,5 are determined similarly.
After that, the yield increase due to the quality of genetic trait (genetic rent) is calculated as Y calc 1 -Y min. Similarly, genetic rent is calculated for Y calc 2,3,4,5. The results are summarized in table 4. Table 4. Determination of the impact of genetic factors on the normal yield of zonal crops as of 01.01.2020 (fragment).


Components of the Public Budget and their Effects on Public Debt in Jordan

This study aims to identify the role of the main components of the public budget for influencing public debt in Jordan through an econometric study. In particular, the EViews 9 program is applied to the annual time series of public debt, current expenditures, capitalism expenditures, taxes, and external grants from 1990 to 2018. Results are related to the data that served as basis of this study and was issued by the Central Bank of Jordan. This study concludes a set of results, including the presence of a positive and moral effect of capital spending on public debt and the presence of a negative and moral effect of taxes on public debt in short and long terms. Results show a positive and significant effect of the current spending on public debt in the short term and a positive, nonsignificant effect in the long term. In addition, a negative, non-significant influence of external grants on public debt in the short term and a negative moral effect in the long term are found. A set of recommendations is presented. First, mechanisms to reduce waste in public budget should be activated, particularly in the area of current expenditures, through addressing administrative sagging in the public sector. Thus, employment is linked to the level of future productivity. Second, corruption and nepotism should be fought against. Third, transparency should be imposed in state departments.

INTRODUCTION
Many countries at various levels of their economy, whether developed or developing, seek to borrow in internal and external terms given that the advanced state fail to discourage borrowing. Therefore, a number of developed countries occupy the top position in public borrowing worldwide. For instance, among the 181 countries with available public debt data worldwide, Japan and Greece are considered the highest countries that are registered for public debt in relation to the gross domestic product (GDP) with the amount of 237. 13% and 184.85, respectively (IMF, 2018).
However, this ratio remained high throughout the study period, given that it has an approximately 106% average during the study period (Central Bank of Jordan).
The aggravation of the Jordanian public debt remains one of the most important economic problems that concern numerous groups of the Jordanian society who are interested in the economic and financial affairs. The public debt problem is a candidate for expansion over time, given the deteriorating economic conditions that have been witnessed by the country. As the level of domestic production declines and growth rates decrease, chronic poverty, high unemployment rate, which reached 18.5%, imbalances in the public budget represented by the increase in current expenditures, fluctuations in grants and foreign aid, and a significant increase in the tax burden have burdened different sectors of the Jordanian society. Therefore, this study focuses on answering the following question. To what extent can the main components of the public budget affect the public debt of the state of Jordan?

Importance
The value of the study lies in the growing problem of public debt, that is, the spiral of public debts in Jordan, whereby its negative effects may be reflected in several aspects. The most notable aspects include the inability to control public debt, considerable challenges in serving the public debt, and economic and political dependence. In addition, the current study is important by determining the vital role of the general budget components for influencing public debt. Hence, the researchers attempt to construct an econometric mode. Based on the aforementioned problem and importance, the study aims to: 1. Clarify the main components of the general budget and its developments in Jordan. 2. Analysis of developments in the public dept in Jordan during the study period. 3. Build an econometric model to exhibit the role of the main components of the general budget for influencing Jordan's public debt during 1990-2018.

Objectives
To achieve the desired objectives, the study seeks to test the following hypotheses. Hypothesis 1: Statistically significant current expenditures fail to positively affect the public debt of Jordan. Hypothesis 2: Capital expenditures lack positive and statistically significant effect on the public debt of Jordan. Hypothesis 3: Significant amount of tax lacks negative effect on the public debt of Jordan. Hypothesis 4: Grants and foreign aid lack negative effect on the public debt of Jordan.
The long-standing issue of public debt has been the focus of many economic and financial researchers worldwide, and a number of theoretical and empirical studies pay attention to it. For example, Belguith and Omrane (2017) identified the determinants of public debt at the macroeconomic level in Tunisia and revealed that inflation and investment reduce the value of public debt, whereas the real interest rate, budget deficit, and trade openness increase public debt. Their study also showed that the budget deficit is the most important determinant of public debt in Tunisia. Uguru (2016) confirmed that current and capital government expenditures positively affect the public debt in the Nigerian economy. Thus, public borrowing in Nigeria is due to the government budget deficit. Lau and Lee (2016) investigated Thailand and Philippines and indicated that the inflation index and real interest rate are important determinants of external debt in Thailand in the short term. Moreover, GDP and money supply in the broad sense are the two most important factors that determine external debt in the short term in the Philippines. Cooray et al. (2016) showed that increasing corruption increases public debt, reduces tax revenues, and increases government spending and thus accumulates debt year. Awan et al. (2015) concluded that a positive relationship exhibits a significant effect between the economic variables, namely, fiscal deficit, nominal exchange rate, and trade openness and foreign debt in Pakistan. A positive relationship exists between foreign aid and external debt, but this relationship is insignificant. Swamy (2015) concluded that the growth of debt is due to government J that stems from the macroeconomic determinants.
A study of a world sample revealed that GDP Alhakiqia, foreign direct investment growth, government expenditure, and inflation and population growth negatively affect public debt. By contrast, total fixed capital formation, final consumption expenditures, and commercial openness positively affect public debt. Mwikali (2013) concluded that an increase in the budget deficit increases the public debt in Kenya and that an inverse relationship exists between public debt and total grants. Furthermore, a strong relationship exists between public debt and the determinants including budget deficit, total grants, balance payments, and exchange rates. Bittencourt (2013) It revealed that The economic environment that generates prosperity in economic activity is an important factor in keeping public debt ratios under control in the South American region. The study also concludes that economic activity is the only variable that has been able to strongly reduce government and external debt in the South American countries region. Sinha et al. (2011) which was conducted on a sample of countries of the world included 31 countries, revealed that the indicators of actual economic growth, government spending, long-term interest rates, foreign direct investment, and the inflation rate are negatively correlated with total public debt. In addition, the current account and population density are negatively related to total public debt. Al-Morsi (2005) identified the causes of internal and external borrowing and found that the gaps in economic resources and inflation stagnation are among the most important internal causes of borrowing; by contrast, the most important external causes are the global economic recession, the deterioration of trade conditions, and the high rate interests in international financial markets. Tiruneh (2004) showed that the most important factors that compel developing countries toward external borrowing in the 1980s and 1990s are poverty (savings gap), income instability, and external factors including cheek payments of religion and fled the capital. Gartner (2003) and Menize (2005) confirmed the important role of budget deficit in public debt accumulation in addition to the financing of the budget deficit through external borrowing.
With regard to the level of the Jordanian economy, Al-Fawwaz (2016) investigated the presence of a positive moral effect of the terms of trade exchange on external debt in Jordan in the long term and found that a negative effect exists with statistical significance of the variable per capita GDP on the external debt. Bader and Magableh (2009) indicated that the size of the external debt, resource gap, and actual exchange rate influence the public budget deficit, Where its transactions were statistically significant, but the real exchange rate was the most. Fanek (2005) indicated that the size of the Jordanian public debt rose to 3% on average during 2000-2004, which is the same percentage of the budget deficit to the GDP, and concluded a positive relationship between the two. Tarawneh and Abdalrazaq (2002) found that the trend of external public debt tends to increase due to the decrease in domestic savings and the inefficiency in the use of capital. They also emphasized a positive and direct relationship between the budget deficit and the rise public debt in Jordan.
After previous foreign studies related to public debt are reviewed, we find that these studies sought to determine the extent of the influence of various macroeconomic variables on public debt and external debt. In Jordan in particular, we find that the studies of Al-Fawwaz (2016), Bader andMagableh (2009), andTarawneh andAbdalrazaq (2002) focused on the overall economic factors affecting external public debt. By contrast, Fanek (2005) paid attention to developments in the size of the Jordanian public debt, which was affected by the deficit of the public budget. This study focuses on the effect of the main public budget components, namely, current expenditures, capital expenditures, taxes, and external grants on the Jordanian public debt and designs a standard economic model. This model provides an applied analytical basis that can be guided by financial and economic policy makers in Jordan to deal with the budget components through setting the appropriate policies that limit the exacerbation of public debt.
Public debt is the money owed by the government or the total debt of all government units, including the state and local governments. Public debt is the total financial responsibilities, which include money owed to individuals, mutual funds, hedge funds, pension funds, and foreign governments, among others, of state agencies of any country. This type of debt considers government obligations, future pension payments, and payments for goods and services that the government has contracted and has not yet paid for. Moreover, it is away to fund government operations; governments can also generate funds to settle their debts and thus avoid paying interest. However, the generation of funds will merely reduce the interest rate and will not cancel the debt itself, thereby potentially increasing inflation, No country in the world is without public debt. Rich countries endowed with natural resources have debts because of its several important benefits in relation to the economy. Those benefits include the process of managing liquidity in the economy because short-term debt instruments are used by the government to absorb liquidity from the economy when high inflation occurs. Moreover, debt is an opportunity to provide increased financial liquidity for the government to implement its financial policies and implement its development plans (Manaf, 2017).
Public debt is a basic reference for pricing other investment assets such as corporate bonds, stocks, and real estate, among others. Given that government bonds carry a low risk, the government should pay bond holders regardless of their financial status except from bankruptcy. Therefore, if the interest rate on government bonds is imposed for 90 days at 3% annually, then other assets must be higher than this rate and proportionate to the high risk. Therefore, government bonds are reference to pricing the return on other financial assets. Public debt is a valuable investment opportunity for financial institutions, pension and insurance institutions, specialized lending institutions, and individuals to diversify their investment assets in addition to buying stocks and real estate.
However, a substantial increase in debt is unhealthy for the economy, given that the government will need additional financing and should raise the interest rate on its bonds, thereby inducing the competition of the government in the private sector in the field of borrowing from the banking system. Hence, banks are reluctant to provide loans to projects and investments in the private sector and promote sufficiency through purchasing government bonds, given that they are guaranteed profit and lack risk ratio for them.
The exacerbation of the debt indicates the high burden of debt service in installments and benefits. This circumstance affects the volume of spending on the investment item and on fields of education, health, wages and other areas related to improving livelihoods and meeting the needs of human development in society, thereby harming citizens and their livelihood (Manaf, 2017).
Economists and policy analysts disagree about the consequences of assuming public debt. For instance, Kenyans consider that state intervention is necessary to achieve economic stability and reduce the class gap among members of the society. Kenyans rejected the idea of automatic balance and perceived that balance at the level of full employment is a special and rare occurrence. Therefore, the state should intervene to direct the economy through the fiscal policy of governments (Al-Ali, 2008), particularly with regard to increasing government spending on capital projects in a recession. A government with financial deficit or additional loans will exhibit positive effects on the growth of the economy, thereby increasing tax revenues and reducing the debt-to-GDP ratio (Al-Mefleh, 2019).
Despite the negative consequences that developing countries had to endure from Kenyan policies and the rise in the amount of debt, new ideas have emerged, such as the Monetary School or the Chicago School. Its ideas were based on addressing the accumulated deficit in the budget through reducing public expenditures of a social nature. Economic reform programs are based on a monetary vision toward public loans (Othman, 2008).
Those who follow the standard approach perceive that the balance of the public budget is performed regularly and annually and thus reflects the economic and political philosophy of the state; that is, they consider the balance between public expenditures and public revenues as a goal that must be achieved under all circumstances (Arthur and Steven, 1998). They perceive that increasing public revenues means increasing the size of government deductions, thereby exhibiting negative effect on the financial revenues and private investments of individuals and consequently on economic activity (Abdullah, 1998).

Data
This study uses annual data to analyze the effect of the main general budget components, namely, current expenditures, capital expenditures, taxes, and external grants on the Jordanian public debt from 1990 to 2018. This period enables researchers to accurately obtain data related to the study variables. Moreover, since the beginning of this period, the Jordanian state began to adopt correction programs in cooperation with the International Monetary Fund in 1989 and 1992. The researchers collect study data on the annual reports of the Central Bank of Jordan.
This study also utilizes statistical and descriptive methods to achieve the desired objectives and examine the hypotheses. In this context, the development of public debt and the main components of the public budget in Jordan are traced and the EViews 9 program is adopted to analyze and measure the effects of the main components of the public budget on the public debt of Jordan from 1990 to 2018.

Model Specification
This section discusses the experimental analytical framework about the effect of the components of the public budget that affect the Jordanian public debt. Based on economic theory and previous studies, the study model was constructed as follows: whereas TD signifies public debt; CUEX denotes current expenditures; CAEX represents capital expenditures, TAX: taxes, EG: external grants.
To determine the appropriate mathematical formula for the study model, the following formula is adopted: (2) whereas α represents the constant of the pattern; β4, β3, β2, β1 are the model parameters; t signifies time period, and εt denotes the random error limit.
The values of these variables are used as percentage of the GDP, which is the best model for achieving the study hypotheses according to different statistical and economic criteria.
Economic theory assumes a positive relationship between current expenditures (CUEX) and public debt (TD) and between capital expenditures (CAEX) and public debt (TD) because increasing public expenditures entails an increase in the budget deficit and thus increases public debt. Economic literature also assumes that a negative relationship exists between taxes (TAX) and external grants (EG) on the one hand and public debt (TD) on the other hand. This assumption is explained by the notion that increasing public revenues decreases budget deficit, thereby decreasing public debt.

Analysis of the Evolution of Study Variables
First: Analysis of the development and trends of the general budget components in Jordan from 1990 to 2018. Figure 1 illustrates that the total public spending in 2018 amounted to 8567.3 million dinars compared with (1032.7) million dinars during 1990. Therefore, an increase of approximately 729% is evident. The current expenditures in 2018 amounted to 7619.6 million dinars compared with (841.4) million dinars in1990, thereby increasing by approximately 806%. Capital expenditures also increased and reached 947.7 million dinars in 2018 compared with 191.3 million dinars in 1990. Therefore, its amount increased by approximately 395%. The ratio of current and capital expenditures to public spending has reached 81% and 19%, respectively, on average during the study period ( Figure 2). Figure 3 presents that the ratio of public expenditures to GDP has reached an average of (32.8%) during the study period; current expenditures account for 26.5% of them, and capital expenditures reach 6.3%. The proportion of public revenues over GDP generated an average of 29.9% during the study period. Figure 6 displays the proportion of public revenues over GDP. The highest percentage was recorded in 1992 (37.6%), whereas the lowest was documented in 1990 (22.6%). Figure 4 indicates the doubling of tax revenues from 497 million dinars in 1990 compared with 4535 million dinars in 2018. Thus, an increase of 812% in public revenues is evident. Figure 7 reveals that the percentage of tax revenues of GDP reached an average of 18.1% during the study period. The highest percentage was recorded in 2007 (24.7%), whereas the lowest rate was documented in 1990 (11.9%). Figure 6 illustrates that the percentage of external grants from public revenues reached an average of 13.4% during the study period. The percentage of external grants from GDP reached an average of 4% during the study period. The highest rate at 9.5% was recorded in 2003, whereas the lowest rate at 1.5% was documented in 2012 ( Figure 7).

Analysis of the development of general revenues
Second: Analysis of the development and trends of public debt in Jordan from 1990 to 2018. Figure 8 indicates that the total of public debt in 2018 amounted to 28,308.5 million dinars compared with 606.8 million dinars in 1990. Thus, the increase in convergence accounts for 364%. Figure 9 reveals that the annual growth rate of Numuddin witnessed a gradual decline in 1990-2001 and decelerate in 2002 until the end of the study period. The average rate of public debt in Numaldine is approximately 6% during the study period. The highest growth rate at 22% was recorded in 2012. The ratio of public debt to GDP has registered an approximately 106% in public debt to GDP the average period of study ( Figure 10). This high percentage is considered unacceptable, given the limited resources of the Jordanian economy. The coming years are dreaded to witness a slowdown in the Jordanian economy, a decrease in tax collections, in addition to the fading of external grants linked to political positions imposed on Jordan. Furthermore, budgets of donor countries are suffering from financial hardship for several reasons, including regional conflicts and the fluctuation of oil prices. The Gulf countries that provide the largest percentage of foreign grants to Jordan are mentioned.

Test for Unit Root
Time series stability test (Unit Root Test) is conducted using the unit root test (DKF) and assessing the stability of the variables through probability value, value, and values.

Auto Regressive Distributed Lag (ARDL)
Given the varying stability of the aforementioned variables, the ARDL model is considered the most appropriate model to use given that the data is not required to be stable at the same stability rate (Pesaran et al., 2001). After the ARDL method is estimated, the results of the joint integration test among the variables is obtained. Table 2 suggests that the calculated F value of 6.351773 (greater than the upper limit value of 5.06) at the 1% level of significance. The alternative hypothesis (H1: = b1 ≠ b2 ≠ b3 ≠ b4 ≠ b5 6 b6 ≠ 0) is accepted, and the null hypothesis (H0: = b1 = b2 = b3 = b4 = b5 = b6 = 0) is rejected. Therefore, a long-term balance relationship exists between the public debt and the explanatory variables and a common complementary relationship exists among the variables of the study model.

Form Stability Test (CUSUM) Cumulative Sum of Recursive Residual
After the error correction formula for the ARDL model is estimated, the structural stability of the long-and short-term transactions must be tested. Thus, we followed the test conducted by Al Abdali (2014,261).
This test indicates that the structural stability of the parameters estimated by the error correction formula for the ARDL model is achieved when the CUSUM statistic line is confined within the critical graphs at the 5% significant level. However, these parameters are unstable in the case of the static graph out of the critical graphs at a level with the same moral. To ensure that the data used in this study lack any structural change and the extent of stability and consistency of long-term transactions with estimates of short-term parameters, the stability test results are shown in the following graph. Figure 11 represents the stability test of the model CUSUM and shows that the regression line passes the mean of the critical region boundary lines. Thus, the model is stable at significant limits. The researchers prepared the data on the basis of software outputs (E views 9). The variable was significant at the level 1%*. -The variable was significant at the level 5%** Figure 11: Model stability test (CUSUM of square)

Estimated Parameters of the Long-and Shortterm Model
After a common integral relationship is confirmed between the dependent and independent variables, the parameters of the ARDL model for the long and short terms are estimated according to Equation (2) on the basis of the number of specified slowdown periods. The criteria of the delay period test is used for all variables. In particular, the Akaike Information Criterion (AIC) of deceleration periods is utilized. This criterion implies an estimation that includes decelerators using the time series included in the model. The following tables show the results of these estimates. Table 3 indicates the variables that represent the main components of the public budget, which are chosen based on economic theory and the size of the changes in the Jordanian public debt. Positive and negative components are found. Therefore, the ECM error correction equation takes the following form: Cointeq = TD (−8.9819 * CAEX −4.6833 * CUEX −7.7798 * TAX −9.0944 * EG +338.7743).

Short-term Relationship
ARDL Co-integrating and Short-term Form. Table 4 reveals that the estimates of the short-term parameters correspond to a considerable extent in terms of significance and signals with the results of the long-term capabilities. In addition, the values of the parameters differ in varying proportions.

Evaluating the Economic Capabilities of Model Parameters in the Long-and Short-run
The ARDL model estimation in Tables 3 and 4 indicate the following results.
The CUEX parameter indicates a positive and significant effect of current expenditures on the Jordanian public debt in the short term. By contrast, a negative and insignificant effect is found in the long term. The value of partial flexibility of current expenditures with respect to public debt in the short term is 1.811970. Therefore, current expenditures increase by 1% as the public debt increases by 1.811970. The partial elasticity value for current expenditures in relation to the public debt in the long term is −4.683302. Thus, an increase in current expenditures by 1% leads to an increase in public debt by −4.683302. This result is inconsistent with the economic assumptions that confirm a positive relationship between the expenses with a rate of 1% that increases public debt by −4.683302. Moreover, this finding is inconsistent with the economic assumptions that confirm a positive relationship between current expenditures and public debt and with the study of Uguru (2016). The reason behind this finding may be explained by the influence of Jordan on the exchange rate crisis since the late 1980s. Consequently, the ratio of public debt to GDP has increased. Jordan also adopted economic reform programs since 1992. Thus, the debt size attributable to the GDP decreased from 221% in 1990 to approximately 105% on average during the study period. However, financing has become the largest part of current expenditures at the expense of reducing investment spending and tax revenues.
The CAEX parameter indicates that capital expenditures positively and significantly affect the Jordanian public debt in the short and long terms. The public debt increases by 1.714632. The value of partial flexibility for capital expenditures in relation to public debt in the long term is 8.981895. Thus, an increase in capital expenditures by 1% increases public debt by 8.981895. This result corresponds to the economic hypotheses that confirm a positive relationship between capital expenditures and public debt. This finding is consistent with the study of Uguru (2016).
The TAX parameter indicates that taxes negatively affect the Jordanian public debt in the short and long terms. The value of partial flexibility of taxes in relation to public debt in the short term is (−0.926382). Thus, increasing taxes by 1% decreases the public debt by −0.926382. The partial flexibility value of taxes in relation to public debt in the long term is −7.779785. Therefore, increasing taxes by 1% decreases public debt by −7.779785. This result is consistent with economic assumptions that confirm the existence of a negative relationship between taxes and debt year.
The EG factor indicates that external grants negatively affect the Jordanian public debt in the short term and a moral negative in the long term. The value of partial flexibility for external grants   in relation to public debt in the short term is −0.340361. Thus, the increase in external grants by 1% decreases public debt by −0.340361. The partial flexibility value for external grants in relation to public debt in the long term is −9.094416. Therefore, an increase in external grants by 1% decreases public debt by −9.094416. This result is consistent with economic assumptions that confirm a negative relationship between external grants and public debt, as well as with the study of Mwikali (2013).
It is noted from the results in Tables 3 and 4 the validity of the statistically estimated model in general, all the variables are significant according to the test (t) except for the short-term parameter of the external grant variable, and the long-term parameter of the current expenditures variable. It is noted from Table 3that the value of the parameter Adjusted R-squared has reached (97%), and this indicates that the independent variables represented in the model explain a large percentage of the behavior of the dependent variable represented by the public debt. As for the value of DW, the results showed that it is equal to (1.67), which indicates that the model is free from the problem of (auto correlation). Also, the test (F) was statistically significant at the level of significance (1%) and amounting to (83.86), which confirms the significance of the estimated model as a whole. From Table 4 it appears that the parameter for correction of the speech is at a level (1%), and it appeared with a negative signal, whose value is equal to (−0.190899), which confirms the existence of a balanced relationship in the long run between the Jordanian public debt and the independent variables represented in the model, as The long-term imbalance is quickly corrected (19%).

RESULTS AND RECOMMENDATIONS
This study achieved certain statistical results regarding the components of the public budget and their effects on public debt in Jordan.
-An upward trend is evident in the growth of public expenditures despite the fluctuations. Current expenditures contribute to controlling investment expenditures in public expenditures, given that the ratio of current expenditures to public expenditures reached approximately (81%) on average during the study period. -The tax revenue contribution dominates public revenues at an approximately 60.5% average rate during the study period. -The growth of external grants is volatile due to its influence on the nature of the prevailing economic and political conditions in donor countries during 1990-2018. -The high ratio of public debt to GDP accounts for approximately 106% on average during the study period. Thus, Jordan may be pressured from the limited resources in its economy. -The stability characteristic of the dependent variable (TD) and the independent variables (CUEX, CAEX, EG) is achieved at the level I (0). The variable (TAX) is stabilized when the first difference is determined. -The common integration test according to the ARDL model confirmed the existence of a common integration between the dependent and the independent variables, because the statistical value (F) is greater than the upper and lower limits of its critical values. -Standard model estimation proved that capital expenditures positively and morally affect public debt in the short term. By contrast, current expenditures negatively and insignificantly affect public debt in the long term. Results also demonstrated that taxes and external grants negatively and morally affect public debt. -The ARDL error correction model estimation revealed that capital expenditures and current expenditures positively and significantly affect public debt in the short term. Furthermore, taxes negatively and morally affect public debt in the short term, and external grants negatively and insignificantly affect public debt in the short term. -The error correction parameter is equal to −0.190899 and has a significant level of 1%. It exhibits a negative value, which confirms the existence of a balanced relationship in the long run. In addition, the error correction mechanism is present in the model, and the parameter measures the speed of return to the equilibrium position in the long term. Thus, the long-term imbalance is rapidly corrected (19%).
Following the aforementioned results, the study presents the following recommendations.
-Mechanisms should be activated to reduce waste spending in the public budget, particularly in current expenditures, through addressing administrative slack in the public sector. Thus, employment is linked to the level of future productivity, to fighting corruption and nepotism, and to imposing transparency in the departments of the state. -Economic feasibility studies should be adopted for estimating the size of capital expenditures. In addition, the implementation of capital expenditure items should be continuously monitored and followed-up. -Additional studies should be conducted to analyze public debt in Jordan, identify the factors that affect the increasing public debt burden, and estimate the extent of losses to the Jordanian economy as a result of the exacerbation of public debt and serving the public debt. These study objectives should be addressed in addition to developing a scenario that includes specific scenarios on the mechanism of dealing with public debt. -Tax collection mechanisms should be enabled through developing a database of taxpayers at the Income and Sales Tax Department, fighting tax evasion, and taking necessary measures regarding distortions in the tax reality in Jordan, particularly those related to high tax rates and their multiplicities. These measures should be implemented to a degree that is no longer tolerated by those charged with paying them, thereby exhibiting a negative impact on the national economy. -Sources of public revenues and work should be diversified to attract various investments. Moreover, necessary attention should be provided to them to compensate for the lost grants and aid as a source of public revenues, given the economic and political conditions facing the donor countries. Thus, foreign grants and the possibility of future fading may sharply reduce.


Prediction of Indonesian financial crisis using Markov regime switching autoregressive conditional heteroscedasticity models based on bank deposits and lending/deposit interest rate indicators

The financial crisis that occurred in middle of 1997 made Indonesia to become one of the countries which had the worst and the longest affected in term of its rate of recovery. This event made us aware of the importance of creating an early warning system for the financial crisis. The crisis occurred due to several macroeconomic indicators experiencing very high fluctuation and changes in the structure of the condition (regime). The combination of volatility and Markov regime switching models is a type of model that can explain the fluctuation and changes in such condition. The indicators of bank deposit and lending/deposit interest rate in January 1990 to June 2019 were used to construct the combined model. The results of this research showed that the MRS-ARCH(2,1) model for the bank deposit and lending/deposit interest rate indicators can explain the conditions of the financial crisis that occurred. The predicted value of the MRS-ARCH(2,1) model shows that from July 2019 to June 2020 there were no signs of a financial crisis in Indonesia.

Introduction
The devaluation of the Thai Bath currency in middle 1997 caused financial crisis in Asia. The crisis then spread to several countries in Asia such as Indonesia, Hong Kong, Laos, South Korea and Malaysia. Indonesia is one of the worst affected countries and has the longest recovery period due to the financial crisis. Based on these events, an early warning system becomes very important to detect financial crises. Banking indicators such as bank deposits and lending/deposit interest rate can detect financial crisis. These banking indicators have changing condition and high fluctuation. Volatility models can be used to explain high volatility, whereas Markov regime switching model can be used to explain changing condition.
Engle [1] introduced ARCH model, this model was used to estimate the average and variation of annual inflation data in United Kingdom from 1958-1977. Prediction of variance from ARCH model is more realistic. Generalized autoregressive conditional heteroscedasticity (GARCH) was introduced by Bollerslev [2] to estimate model for United States gross national product data from 1948-1983. The GARCH model are less able to clarify the effects of leverage in some cases. According to Chen [3], the leverage effect is a condition where volatility experiences face good and bad news periodically so that it generates asymmetrical effect on volatility.
According to Hamilton [4], Markov regime switching (MRS) is a time series model that explain changing conditions. Based on Hamilton and Susmel [5], a combination between MRS and ARCH model was implemented on the United states GNP data from 1952-1984 and this combined model can explain the changing condition of GNP data. Chang [6] identified volatility of exchange rate and stock market in Korea and the global financial crisis using the MRS-ARCH model. Sugiyanto [7] forms a model which can detect financial crisis using a combination of volatility and MRS model based on ICI, real output and domestic credit/GDP indicators. This research discusses the financial crisis that occured in Indonesia based on bank deposit and lending/deposit interest rate using a combination of volatility and MRS model.

Theoritical framework
There are several theories that are in this research to detect and predict financial crisis in Indonesia using a combination of MRS and volatility model.

Autoregressive Moving Average (ARMA) Model
According to Tsay [8], ARMA (p, q) can be formulated as with is log return data at time t, is ARMA residual, is model constant, are parameter of the AR (p), and are parameter of the MA (q).

Volatility Model
Based If the order of ARCH model was greater than 5, then the Generalized Autoregressive Conditional Heteroscedasticity (GARCH) was formed. Based on Tsay [8], GARCH (m, s) can be written as

∑ ∑
with is the parameter of GARCH model.

Markov Regime Switching Autoregressive Conditional Heteroscedasticity (MRS-ARCH) Model
According to Hamilton and Susmel [5], MRS-ARCH model with k optimum state and m order can be written as ∑ .

Markov Regime Switching Generalized Autoregressive Conditional Heteroscedasticity (MRS-GARCH) model
According to Gray [9], MRS-GARCH model can be written as for is used to represent a vector of observed variables , shows unobserved random variables which meet the first order of Markov chain that we can take values from them 1,2 , . Variables is considered as a regime which its process in the .

Transition Probability
The parameter of random variables and conditional distribution that are not observed with constant transition probability is written by in matrix form, P can be written as ( ).

Smoothed probability
According to Kim and Nelson [10], smoothed probability is written by ∑ According to Sopipan et al. [11], the predicted value of smoothed probability value at T + 1 can be obtained with where p ji some elements of P jxj . transition matrix.

Method of research
The data used in this research are monthly data from January 1990 to June 2019 of bank deposits and lending/deposit interest rate indicators. Those data were obtained from the IMF. The data is separated into two parts, from January 1990 to June 2018 used as training data while from July 2018 to June 2019 as testing data. The stages carried out in this research are as follows: (1) Making a plot of data.
(2) Measuring stationarity of both data using ADF test. If the data were unstationary, transformation was done using log return transformation.

Results and discussion
The data is separated into two parts, from January 1990 to June 2018 used as training data while from July 2018 to June 2019 as testing data. The training data is used to estimate the model while the testing data is used to evaluate the model.

Data and transformed data plot
The plot of data from both indicators shown in Figure 1 and Figure 2.  Based on figure 1 and figure 2 it can be seen that both data contain trends which indicate that the data were not stationary. Moreover, probability value of ADF test was greater than α= 0.05, so bothe data were not stationary. Therefore, transformation to stationary the data using log return was performed. Log return transformation plot of each indicator shown in figure 3 and figure 4.    Figure 3 and figure 4 show that the data of log return fluctuate around zero, indicating that the data were stationary. Moreover, probability value of ADF test was less than 0.05, so the transformed data were stationary.

ARMA Model estimation
The next step was to make an ACF and PACF plot to estimate the ARMA model. ARMA (1,0) for bank deposits and ARMA (1,0) without an intercept for lending/deposit interest rate is the best ARMA model with the smallest AIC. Then, the best model for each indicator are written by   show that the residue of ARMA model was leptokurtic so that clustering is necessary to be done. Agglomerative Hierarchical Clustering with Dynamic Time Warping (DTW) distance is used to cluster the residue of ARMA model. The optimal number of clusters was 2 for each indicators.

Volatility Model Estimation
Furthermore, the residual values of the ARMA(1,0) and ARMA(1,0) without intercept are used to check the effects of heteroscedasticity using Lagrange multiplier (LM) test. The probability value of LM test is smaller than 0.05, so it can be concluded that the ARMA model residuals contain heteroscedasticity effects. To deal with heterocedasticity, a volatility model is formed. ARCH (1) is the best volatility model for bank deposits, it can be written as The next step is conduct a diagnostic tests on the residues of each volatility model. The probability value of the Ljung-Box test is greater than 0.05, it means that there is no autocorrelation in the volatility model. According to Kolmogorov-Smirnov test, the probability value is greater than 0.05, it means that the residual is normally distributed. Then, the probability value of LM test is greater than 0.05, it means that the residual is homogeneous.

MRS-ARCH Estimation
The MRS-ARCH (2,1) model for each indicator is the ARCH(1) model which has 2 regimes. The first regime describes low volatility and the second regime describes high volatility. The transition probability matrix with two regimes for bank deposits is  According to the smoothed probability of those indicators, that lending/deposit interest rate indicator can give crisis signal faster than bank deposits indicator. It was caused by the actual crisis condition which began on July 1997, while lending/deposit interest rate indicator gave a sign of crisis condition starting on June 1995 and the bank deposits indicator gave a signal of crisis starting on November 1997.
Next, predict the value of smoothed probability in the testing data. The results of the predicted smoothed probability in the testing data for both indicators are shown in table 1 and 2. According to table 1 and 2, it can be seen that the predicted and actual crisis conditions in the testing data are the same. So, both models can predict the actual condition of financial crisis in Indonesia correctly. Next, we can predict the value of smoothed probability of the next period of the two indicators, the predicted results are shown in table 3.  Table 3, it can be seen that the smoothed probability in June 2019 to June 2020 is less than 0.7 for bank deposits and less than 0.65 for the lending / deposit interest rate. So it can be concluded that in June 2019 until June 2020 there will be no financial crisis in Indonesia or Indonesia's economic conditions will be steady.

Conclusion
MRS-ARCH (2,1) is the best model based on the indicators of bank deposits and lending/deposit interest rate. Then, based on the result of the predicted smoothed probability of both MRS-ARCH (2,1) model, it was found that in July 2019-June 2020 a financial crisis would not occur in Indonesia.