## Private and Public Debt: Are Emerging Markets at Risk?

_IMF Working Papers, March 22, 2017_

## Source details

**Canonical URL:** [Private and Public Debt: Are Emerging Markets at Risk?](https://www.imf.org/en/publications/wp/issues/2017/03/22/private-and-public-debt-are-emerging-markets-at-risk-44754)

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## Bibliographic details
- Authors: Marco Bernardini, Lorenzo Forni
- Published: March 22, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475588170.001

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### Overview
- Authors: Marco Bernardini, Lorenzo Forni  
- Publication date: March 22, 2017  
- Series: Working Paper No. 2017/061  
- Issue: 061

### Key findings
- Using a dataset covering a large sample of emerging economies (EMEs), the study examines the relationship between debt and economic performance in bad times.
- Private debt buildups exacerbate the duration and intensity of recessions in advanced economies (AEs); this effect is documented to be very pronounced in EMEs as well.
- Rapid public debt buildups are unlikely to be the primary trigger of financial crises.
- In EMEs, rapid public debt buildups are associated with deeper and longer recessions than in AEs.
- Part of the difference in recession depth and duration between EMEs and AEs is explained by a less supportive fiscal policy in EMEs during crises.

### Analysis and interpretation
- Comparative effect of private debt:
  - The amplification of recession duration and intensity associated with private debt accumulation, previously documented for AEs, is observed and stronger in EMEs.
- Role of public debt:
  - Rapid increases in public debt are not identified as the primary cause of financial crises.
  - Nonetheless, when rapid public debt buildups occur in EMEs, they correlate with more severe and prolonged downturns relative to AEs.
- Fiscal policy responsiveness:
  - A contributing factor to the worse outcomes in EMEs is a less supportive fiscal policy response during crises compared with AEs.

### Subject classification and keywords
- Subject: Banking crises, Financial crises, Fiscal policy, National accounts, Private debt, Public debt
- Keywords: accumulation matter, banking crises, debt accumulation, debt buildup, debt-recession cycle, emerging markets, financial crisis, Global, government spending, Private debt, private-public debt, recessions, WP

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## Content in this bundle

- **Private and Public Debt: Are Emerging Markets at Risk?, WP/17/61, March 2017**
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_Source: https://www.imf.org/en/publications/wp/issues/2017/03/22/private-and-public-debt-are-emerging-markets-at-risk-44754_