Debt sustainability : a global perspective / Ludger Schuknecht.

Format:

Book

Author/Creator:

Schuknecht, Ludger, 1962- author.

Series:

Cambridge elements. Cambridge elements in international economics 2753-9326

Language:

English

Subjects (All):

Debts, Public.

Fiscal policy.

Physical Description:

1 online resource (110 pages) : digital, PDF file(s).

Edition:

1st ed.

Place of Publication:

Cambridge : Cambridge University Press, 2022.

Summary:

This study presents the facts, arguments and scenarios around public debt from a global perspective. Especially the largest economies feature record debt and fiscal risks, including from population ageing and financial imbalances. Given low interest rates, there is no imminent problem. But at some point, debt will have to come down. There are four possible scenarios how debt could come down. First, governments could economise and reform. Second, governments could default. Third, governments could erode the real value of debt via inflation and negative real interest rates. However, this scenario cannot continue forever. Policy errors can prompt a loss of confidence, destabilisation and crisis. This fourth scenario last included the largest economies in the 1970s. It would become a major global challenge if it were to happen again in today's interconnected world.

Contents:

Cover

Title page

Copyright page

Debt Sustainability: A Global Perspective

Contents

Executive Summary

1 Introduction

1.1 Two Visions of Public Debt and Fiscal Risks

1.2 Gauging the Need for Action

1.3 Debt-Related Risks Warrant Debate: Mapping the Study

2 Public Debt and Sustainability

2.1 Introduction

2.1.1 The Merits of Sound Public Finances

2.2 A Recent History of Public Debt

2.2.1 Debt Dynamics over Recent Decades

2.3 Limits to Sustainable Debt

2.3.1 'Safe' Debt Thresholds

2.3.2 Financing Debt

2.4 Fiscal Risks from Population Ageing and Financial Crises

2.4.1 Population Ageing and Social Spending

2.4.2 Private Debt and Financial Crises

2.5 Debt Sustainability: A Local and a Global Challenge

2.5.1 Debt Sustainability Analysis in the EU

2.5.2 IMF Vulnerability and Debt Sustainability Analysis

2.5.3 Merits and Limits of Debt Sustainability Analysis for the Post-COVID World

2.6 Conclusion

3 Debt Sustainability: Further Risk Factors

3.1 Introduction

3.2 Public Spending Size and Quality

3.2.1 The Importance of the Size of Government

3.2.2 More Spending versus Better Spending

3.2.3 Competition from 'Small' Government Countries

3.2.4 The Timing of Adjustment

3.3 Growth Prospects in the Post-COVID World

3.3.1 Falling Growth Rates and Investment

3.3.2 Framework Conditions for Confidence and Private Investment

3.3.3 Zombification

3.3.4 Protectionism

3.3.5 Labour Supply and Growth Divergence

3.4 Financial-Monetary Factors

3.4.1 Financing Conditions, Risk-Taking and Bubbles

3.4.2 Central Bank Challenges

3.4.3 Money and Inflation

3.5 International Financial Linkages

3.5.1 Economic and Financial Globalisation

3.5.2 Financial Globalisation

3.5.3 The Changing Nature of Financial Turmoil.

3.5.4 International Safety Nets and Circuit Breakers

3.6 Conclusion

4 Scenarios of Debt Reduction

4.1 Introduction

4.2 Scenario 1: Consolidation and Reform

4.2.1 Describing the Scenario

4.2.2 A Simulation Exercise

4.2.3 Experiences with Consolidation and Reform

4.2.4 Case Studies of Successful Adjustment

4.2.5 The Political Economy of Consolidation and Reform

4.2.6 The Prospects for Scenario 1

4.3 Scenario 2: Debt Workouts

4.3.1 Describing the Scenario

4.3.2 The Process around Debt Workouts in an International Context

4.3.3 Debt Workouts for Large Countries?

4.3.4 Experiences with Defaults and 'Workouts'

4.3.5 A 'Workout' for Greece

4.3.6 The Political Economy of Debt Workouts

4.4 Scenario 3: Debt Reduction via Financial Repression

4.4.1 Describing the Scenario

4.4.2 Other Measures to Underpin the Persistence of Repression

4.4.3 Experiences with Financial Repression

4.4.4 Political Economy of Financial Repression

4.5 Scenario 4: A Risk Scenario of Destabilisation

4.5.1 Describing the Scenario

4.5.2 The Role of Different Policy Actors in This Scenario

4.5.3 International Repercussions

4.5.4 Experiences with Destabilisation: Lessons and Differences from the 1970s

4.5.5 Political Economy of Debt Reduction via Destabilisation

5 Conclusions

5.1 The Scenarios: Who Benefits and Who Gets Hurt?

Epilogue

Bibliography

Acknowledgements.

Notes:

Title from publisher's bibliographic system (viewed on 31 Aug 2022).

ISBN:

1-009-21849-2

1-009-21850-6

1-009-21852-2

OCLC:

1348481586