Growth Implosions, Debt Explosions, and My Aunt Marilyn : Do Growth Slowdowns Cause Public Debt Crises?

The worldwide slowdown in growth after 1975 was a major negative fiscal shock. Slower growth lowers the present value of tax revenues and primary surpluses and thus makes a given level of debt more burdensome. Most countries failed to adjust to the...

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Main Author:	Easterly, william
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2013
Subjects:	DEBT CRISIS PUBLIC DEBT ECONOMIC STAGNATION ECONOMIC SHOCKS PRESENT VALUE CONSTRAINTS HEAVILY INDEBTED POOR COUNTRIES ECONOMIC GROWTH RATE FISCAL SURPLUS BUDGET MANAGEMENT DEBT SERVICING MIDDLE-INCOME ECONOMIES DEBT RESCHEDULING ADJUSTMENT PACKAGES AGRICULTURE BALANCE OF PAYMENTS BORROWING BUDGET CONSTRAINT BUDGET DEFICITS CONTINGENT LIABILITIES CURRENCY CRISES CURRENT ACCOUNT CURRENT RATIO DEBT DEBT BURDEN DEBT CRISES DEBT LEVEL DEBT OBLIGATIONS DEBT PROBLEMS DEBT RATIO DEBT RATIOS DEBT RELIEF DEBT RESCHEDULING DEBT SERVICE DEBT STOCKS DEBT SUSTAINABILITY DEFICIT REDUCTION DEVELOPING COUNTRIES DEVELOPING COUNTRY DISCOUNT RATE DOMESTIC DEBT ECONOMIC ACTIVITY ECONOMIC GROWTH ELECTRICITY GENERATION EXCHANGE RATE EXTERNAL DEBT FINANCIAL ASSETS FINANCIAL DEVELOPMENT FISCAL DEFICITS FISCAL GAP FISCAL POLICIES FISCAL POLICY FOREIGN DEBT GDP GOVERNMENT EXPENDITURES GROWTH GROWTH PROJECTIONS GROWTH RATE HIGH DEBT HIGHLY INDEBTED COUNTRIES INCOME INDUSTRIAL COUNTRIES INDUSTRIAL ECONOMIES INFLATION INFLATION RATE INFLATION TAX INSOLVENCY INTEREST RATES INTERNATIONAL RESERVES LOW INCOME LOW INCOME COUNTRIES MACROECONOMICS MIDDLE INCOME MIDDLE INCOME COUNTRIES MIDDLE- INCOME COUNTRIES MIDDLE-INCOME COUNTRIES MONEY BASE MONOPOLY NET WORTH OIL OIL RESERVES OVERVALUATION OVERVALUED EXCHANGE RATES POLICIES POLICY RESEARCH POPULATION GROWTH PRESENT VALUE PRIMARY DEFICIT PRIMARY DEFICITS PRIMARY SURPLUS PRIMARY SURPLUSES PUBLIC DEFICITS PUBLIC FINANCE PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SECTOR PUBLIC SECTOR SOLVENCY REAL EXCHANGE REAL EXCHANGE RATE REAL INTEREST REAL INTEREST RATE SLOW GROWTH SOCIAL SECURITY SOLVENCY SOLVENCY CONSTRAINT TAX REVENUE TAX REVENUES TECHNOLOGICAL PROGRESS TIME SERIES VALUATION WORLD DEBT TABLES
Online Access:	http://documents.worldbank.org/curated/en/2001/01/1000470/growth-implosions-debt-explosions-aunt-marilyn-growth-slowdowns-cause-public-debt-crises http://hdl.handle.net/10986/15742

id	okr-10986-15742
recordtype	oai_dc
spelling	okr-10986-157422021-04-23T14:03:19Z Growth Implosions, Debt Explosions, and My Aunt Marilyn : Do Growth Slowdowns Cause Public Debt Crises? Easterly, william DEBT CRISIS PUBLIC DEBT ECONOMIC STAGNATION ECONOMIC SHOCKS PRESENT VALUE CONSTRAINTS HEAVILY INDEBTED POOR COUNTRIES ECONOMIC GROWTH RATE FISCAL SURPLUS BUDGET MANAGEMENT DEBT SERVICING MIDDLE-INCOME ECONOMIES DEBT RESCHEDULING ADJUSTMENT PACKAGES AGRICULTURE BALANCE OF PAYMENTS BORROWING BUDGET CONSTRAINT BUDGET DEFICITS CONTINGENT LIABILITIES CURRENCY CRISES CURRENT ACCOUNT CURRENT RATIO DEBT DEBT BURDEN DEBT CRISES DEBT LEVEL DEBT OBLIGATIONS DEBT PROBLEMS DEBT RATIO DEBT RATIOS DEBT RELIEF DEBT RESCHEDULING DEBT SERVICE DEBT SERVICING DEBT STOCKS DEBT SUSTAINABILITY DEFICIT REDUCTION DEVELOPING COUNTRIES DEVELOPING COUNTRY DISCOUNT RATE DOMESTIC DEBT ECONOMIC ACTIVITY ECONOMIC GROWTH ELECTRICITY GENERATION EXCHANGE RATE EXTERNAL DEBT FINANCIAL ASSETS FINANCIAL DEVELOPMENT FISCAL DEFICITS FISCAL GAP FISCAL POLICIES FISCAL POLICY FOREIGN DEBT GDP GOVERNMENT EXPENDITURES GROWTH GROWTH PROJECTIONS GROWTH RATE HIGH DEBT HIGHLY INDEBTED COUNTRIES INCOME INDUSTRIAL COUNTRIES INDUSTRIAL ECONOMIES INFLATION INFLATION RATE INFLATION TAX INSOLVENCY INTEREST RATES INTERNATIONAL RESERVES LOW INCOME LOW INCOME COUNTRIES MACROECONOMICS MIDDLE INCOME MIDDLE INCOME COUNTRIES MIDDLE- INCOME COUNTRIES MIDDLE-INCOME COUNTRIES MONEY BASE MONOPOLY NET WORTH OIL OIL RESERVES OVERVALUATION OVERVALUED EXCHANGE RATES POLICIES POLICY RESEARCH POPULATION GROWTH PRESENT VALUE PRIMARY DEFICIT PRIMARY DEFICITS PRIMARY SURPLUS PRIMARY SURPLUSES PUBLIC DEBT PUBLIC DEFICITS PUBLIC FINANCE PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SECTOR PUBLIC SECTOR SOLVENCY REAL EXCHANGE REAL EXCHANGE RATE REAL INTEREST REAL INTEREST RATE SLOW GROWTH SOCIAL SECURITY SOLVENCY SOLVENCY CONSTRAINT TAX REVENUE TAX REVENUES TECHNOLOGICAL PROGRESS TIME SERIES VALUATION WORLD DEBT TABLES The worldwide slowdown in growth after 1975 was a major negative fiscal shock. Slower growth lowers the present value of tax revenues and primary surpluses and thus makes a given level of debt more burdensome. Most countries failed to adjust to the negative fiscal consequences of the growth implosion, so public-debt-to-GDP ratios exploded. The growth slowdown therefore played an important role in the debt crisis of the middle-income countries in the 1980s, the crisis of the heavily indebted poor countries (HIPCs) in the 1980s and 1990s, and the increased public debt burden of the industrial countries in the 1980s and 1990s. Moreover, the HIPCs' debt problems were worse than elsewhere because, as a result of poor policies, these countries grew more slowly after 1975 than other low-income countries. Econometric tests and fiscal solvency accounting confirm the important role of growth in debt crises. 2013-09-09T20:50:52Z 2013-09-09T20:50:52Z 2001-01 http://documents.worldbank.org/curated/en/2001/01/1000470/growth-implosions-debt-explosions-aunt-marilyn-growth-slowdowns-cause-public-debt-crises http://hdl.handle.net/10986/15742 English en_US Policy Research Working Paper;No. 2531 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	DEBT CRISIS PUBLIC DEBT ECONOMIC STAGNATION ECONOMIC SHOCKS PRESENT VALUE CONSTRAINTS HEAVILY INDEBTED POOR COUNTRIES ECONOMIC GROWTH RATE FISCAL SURPLUS BUDGET MANAGEMENT DEBT SERVICING MIDDLE-INCOME ECONOMIES DEBT RESCHEDULING ADJUSTMENT PACKAGES AGRICULTURE BALANCE OF PAYMENTS BORROWING BUDGET CONSTRAINT BUDGET DEFICITS CONTINGENT LIABILITIES CURRENCY CRISES CURRENT ACCOUNT CURRENT RATIO DEBT DEBT BURDEN DEBT CRISES DEBT LEVEL DEBT OBLIGATIONS DEBT PROBLEMS DEBT RATIO DEBT RATIOS DEBT RELIEF DEBT RESCHEDULING DEBT SERVICE DEBT SERVICING DEBT STOCKS DEBT SUSTAINABILITY DEFICIT REDUCTION DEVELOPING COUNTRIES DEVELOPING COUNTRY DISCOUNT RATE DOMESTIC DEBT ECONOMIC ACTIVITY ECONOMIC GROWTH ELECTRICITY GENERATION EXCHANGE RATE EXTERNAL DEBT FINANCIAL ASSETS FINANCIAL DEVELOPMENT FISCAL DEFICITS FISCAL GAP FISCAL POLICIES FISCAL POLICY FOREIGN DEBT GDP GOVERNMENT EXPENDITURES GROWTH GROWTH PROJECTIONS GROWTH RATE HIGH DEBT HIGHLY INDEBTED COUNTRIES INCOME INDUSTRIAL COUNTRIES INDUSTRIAL ECONOMIES INFLATION INFLATION RATE INFLATION TAX INSOLVENCY INTEREST RATES INTERNATIONAL RESERVES LOW INCOME LOW INCOME COUNTRIES MACROECONOMICS MIDDLE INCOME MIDDLE INCOME COUNTRIES MIDDLE- INCOME COUNTRIES MIDDLE-INCOME COUNTRIES MONEY BASE MONOPOLY NET WORTH OIL OIL RESERVES OVERVALUATION OVERVALUED EXCHANGE RATES POLICIES POLICY RESEARCH POPULATION GROWTH PRESENT VALUE PRIMARY DEFICIT PRIMARY DEFICITS PRIMARY SURPLUS PRIMARY SURPLUSES PUBLIC DEBT PUBLIC DEFICITS PUBLIC FINANCE PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SECTOR PUBLIC SECTOR SOLVENCY REAL EXCHANGE REAL EXCHANGE RATE REAL INTEREST REAL INTEREST RATE SLOW GROWTH SOCIAL SECURITY SOLVENCY SOLVENCY CONSTRAINT TAX REVENUE TAX REVENUES TECHNOLOGICAL PROGRESS TIME SERIES VALUATION WORLD DEBT TABLES
spellingShingle	DEBT CRISIS PUBLIC DEBT ECONOMIC STAGNATION ECONOMIC SHOCKS PRESENT VALUE CONSTRAINTS HEAVILY INDEBTED POOR COUNTRIES ECONOMIC GROWTH RATE FISCAL SURPLUS BUDGET MANAGEMENT DEBT SERVICING MIDDLE-INCOME ECONOMIES DEBT RESCHEDULING ADJUSTMENT PACKAGES AGRICULTURE BALANCE OF PAYMENTS BORROWING BUDGET CONSTRAINT BUDGET DEFICITS CONTINGENT LIABILITIES CURRENCY CRISES CURRENT ACCOUNT CURRENT RATIO DEBT DEBT BURDEN DEBT CRISES DEBT LEVEL DEBT OBLIGATIONS DEBT PROBLEMS DEBT RATIO DEBT RATIOS DEBT RELIEF DEBT RESCHEDULING DEBT SERVICE DEBT SERVICING DEBT STOCKS DEBT SUSTAINABILITY DEFICIT REDUCTION DEVELOPING COUNTRIES DEVELOPING COUNTRY DISCOUNT RATE DOMESTIC DEBT ECONOMIC ACTIVITY ECONOMIC GROWTH ELECTRICITY GENERATION EXCHANGE RATE EXTERNAL DEBT FINANCIAL ASSETS FINANCIAL DEVELOPMENT FISCAL DEFICITS FISCAL GAP FISCAL POLICIES FISCAL POLICY FOREIGN DEBT GDP GOVERNMENT EXPENDITURES GROWTH GROWTH PROJECTIONS GROWTH RATE HIGH DEBT HIGHLY INDEBTED COUNTRIES INCOME INDUSTRIAL COUNTRIES INDUSTRIAL ECONOMIES INFLATION INFLATION RATE INFLATION TAX INSOLVENCY INTEREST RATES INTERNATIONAL RESERVES LOW INCOME LOW INCOME COUNTRIES MACROECONOMICS MIDDLE INCOME MIDDLE INCOME COUNTRIES MIDDLE- INCOME COUNTRIES MIDDLE-INCOME COUNTRIES MONEY BASE MONOPOLY NET WORTH OIL OIL RESERVES OVERVALUATION OVERVALUED EXCHANGE RATES POLICIES POLICY RESEARCH POPULATION GROWTH PRESENT VALUE PRIMARY DEFICIT PRIMARY DEFICITS PRIMARY SURPLUS PRIMARY SURPLUSES PUBLIC DEBT PUBLIC DEFICITS PUBLIC FINANCE PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SECTOR PUBLIC SECTOR SOLVENCY REAL EXCHANGE REAL EXCHANGE RATE REAL INTEREST REAL INTEREST RATE SLOW GROWTH SOCIAL SECURITY SOLVENCY SOLVENCY CONSTRAINT TAX REVENUE TAX REVENUES TECHNOLOGICAL PROGRESS TIME SERIES VALUATION WORLD DEBT TABLES Easterly, william Growth Implosions, Debt Explosions, and My Aunt Marilyn : Do Growth Slowdowns Cause Public Debt Crises?
relation	Policy Research Working Paper;No. 2531
description	The worldwide slowdown in growth after 1975 was a major negative fiscal shock. Slower growth lowers the present value of tax revenues and primary surpluses and thus makes a given level of debt more burdensome. Most countries failed to adjust to the negative fiscal consequences of the growth implosion, so public-debt-to-GDP ratios exploded. The growth slowdown therefore played an important role in the debt crisis of the middle-income countries in the 1980s, the crisis of the heavily indebted poor countries (HIPCs) in the 1980s and 1990s, and the increased public debt burden of the industrial countries in the 1980s and 1990s. Moreover, the HIPCs' debt problems were worse than elsewhere because, as a result of poor policies, these countries grew more slowly after 1975 than other low-income countries. Econometric tests and fiscal solvency accounting confirm the important role of growth in debt crises.
format	Publications & Research :: Policy Research Working Paper
author	Easterly, william
author_facet	Easterly, william
author_sort	Easterly, william
title	Growth Implosions, Debt Explosions, and My Aunt Marilyn : Do Growth Slowdowns Cause Public Debt Crises?
title_short	Growth Implosions, Debt Explosions, and My Aunt Marilyn : Do Growth Slowdowns Cause Public Debt Crises?
title_full	Growth Implosions, Debt Explosions, and My Aunt Marilyn : Do Growth Slowdowns Cause Public Debt Crises?
title_fullStr	Growth Implosions, Debt Explosions, and My Aunt Marilyn : Do Growth Slowdowns Cause Public Debt Crises?
title_full_unstemmed	Growth Implosions, Debt Explosions, and My Aunt Marilyn : Do Growth Slowdowns Cause Public Debt Crises?
title_sort	growth implosions, debt explosions, and my aunt marilyn : do growth slowdowns cause public debt crises?
publisher	World Bank, Washington, DC
publishDate	2013
url	http://documents.worldbank.org/curated/en/2001/01/1000470/growth-implosions-debt-explosions-aunt-marilyn-growth-slowdowns-cause-public-debt-crises http://hdl.handle.net/10986/15742
_version_	1764429600060866560

Growth Implosions, Debt Explosions, and My Aunt Marilyn : Do Growth Slowdowns Cause Public Debt Crises?

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