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Author/Editor:
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Laura Jaramillo ; Carlos Mulas-Granados ; Elijah Kimani
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Publication Date:
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October 14, 2016
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Electronic Access:
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Free Full text
(PDF file size is 3,133KB).
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Adobe Acrobat Reader
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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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.
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Order a print copy
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Series:
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Working Paper No. 16/202
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Subject(s):
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Public debt | European Union | Developed countries | Developing countries | Cross country analysis | Regression analysis | Econometric models | Economic forecasting | Time series
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