Global Waves of Debt – Causes and consequences by M. Ayhan Kose, Peter Nagle, Franziska Ohnsorge, and Naotaka Sugawara published by World Bank (2020).Another global wave of debt underway…
The global economy has experienced four waves of broad-based debt accumulation over the past fifty years. In the latest wave, underway since 2010, global debt has grown to an all-time high of 230 percent of GDP in 2018. The debt buildup was particularly fast in emerging market and developing economies (EMDEs). Since 2010, total debt in these economies has risen by 54 percentage points of GDP to a historic peak of about 170 percent of GDP in 2018. Following a steep fall during 2000-10, debt has also risen in low-income countries to 67 percent of GDP ($268 billion) in 2018, up from 48 percent of GDP (around $137 billion) in 2010.
Why this study?
The size, speed and reach of the post-crisis debt buildup in EMDEs raises concerns about its potential consequences for macroeconomic and financial stability. To shed light on these consequences, this study presents the first indepth analysis of four waves of debt accumulation, puts the current debt wave into historical perspective, analyzes national episodes of debt accumulation, examines the links between debt accumulation and financial crises, and draws policy lessons. The study employs a wide range of approaches, including event studies, econometric models, country case studies, and a detailed review of historical episodes…
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