Public Debt Through the Ages

IMF Working Papers, January 15, 2019

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Public Debt Through the Ages

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Bibliographic details

• Authors: Barry J. Eichengreen, Asmaa A ElGanainy, Rui Pedro Esteves, Kris James Mitchener
• Published: January 15, 2019
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781484392898.001

Executive summary

• Presents a long-term historical perspective on public debt, documenting how the purposes for which governments borrow have evolved over time.
• Identifies periods when debt-to-GDP ratios rose explosively as a result of wars, depressions, and financial crises.
• Documents that many high-debt episodes were resolved through debasements and restructurings.
• Highlights less widely appreciated successful debt consolidation episodes in which governments inheriting heavy debts ran primary surpluses for long periods to reduce debt burdens to sustainable levels.
• Analyzes the economic and political circumstances that made successful debt consolidation episodes possible.

Major findings

• Purposes of government borrowing have changed materially over long historical horizons.
• Explosive rises in debt-to-GDP are recurrent across history and commonly associated with:
  • wars,
  • depressions,
  • financial crises.
• Common debt-management responses to unsustainable debt episodes included:
  • debasements,
  • restructurings.
• Successful debt consolidation episodes typically involved sustained primary surpluses maintained over long periods by governments that inherited heavy debts.
• Political and economic factors were key determinants of whether a country pursued and achieved consolidation.

Subjects and keywords (as listed)

• Subject: Asset and liability management, Banking, Debt reduction, Domestic debt, External debt, Financial crises, Public debt
• Keywords: debt, Debt History, debt ratio, Debt reduction, Domestic debt, Europe, Global, gold standard, government, Great Depression debt surge, long-term debt, modernization agenda, public goods, short-term debt, Sovereign Debt Composition, Soveriegn Debt, Soveriegn Debt Crises, union government financing, WP

Content in this bundle

• Public Debt Through the Ages, WP/19/6, January 2019
  • Public Debt Through the Ages, WP/19/6, January 2019 (Markdown version)
  • Public Debt Through the Ages, WP/19/6, January 2019 (PDF)