The Blind Side of Public Debt Spikes
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
What explains public debt spikes since the end of WWII? To answer this question, this paper identifies 179 debt spike episodes from 1945 to 2014 across advanced and developing countries. We find that debt spikes are not rare events and their probability increases with time. We then show that large public debt spikes are neither driven by high primary deficits nor by output declines but instead by sizable stock-flow adjustments (SFAs). We also find that SFAs are poorly forecasted, which can affect debt sustainability analyses, and are associated with a higher probability of suffering non-declining debt paths in the aftermath of public debt spikes.
Series:
Working Paper No. 2016/202
Subject:
Contingent liabilities Debt sustainability analysis External debt Government debt management Inflation Prices Public debt Public financial management (PFM)
English
Publication Date:
October 14, 2016
ISBN/ISSN:
9781475545043/1018-5941
Stock No:
WPIEA2016202
Pages:
32
Please address any questions about this title to publications@imf.org