Fiscal Anatomy of Two Crises and an Interlude
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Summary:
The Global Financial Crisis (GFC) and the COVID-19 pandemic are associated with the largest increases in public debt ratios since World War II. We decompose unexpected changes in debt ratios into the role of surprises in economic growth, interest costs, policy measures, and other factors. During both crises, lower-than-expected output contributed the most to higher-than-expected debt ratios. Fiscal policy measures recorded in the public deficit were similar in the two episodes. We also analyze the decade-long interlude (2010-19). Rather than declining as foreseen in a normative scenario, debt ratios remained stable on average, as interest rates, policy adjustment and, in some countries, economic growth turned out lower than expected.
Series:
Working Paper No. 2023/117
Subject:
COVID-19 Financial crises Fiscal policy Global financial crisis of 2008-2009 Health Inflation Prices Public debt
Frequency:
regular
English
Publication Date:
June 2, 2023
ISBN/ISSN:
9798400242120/1018-5941
Stock No:
WPIEA2023117
Format:
Paper
Pages:
25
Please address any questions about this title to publications@imf.org