A Mountain of Debt : Navigating the Legacy of the Pandemic

The COVID-19 pandemic has triggered a massive increase in global debt levels and exacerbated the trade-offs between the benefits and costs of accumulating government debt. This paper examines these trade-offs by putting the recent debt boom into a...

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Main Authors:	Kose, M. Ayhan, Ohnsorge, Franziska, Sugawara, Naotaka
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2021
Subjects:	FISCAL POLICY SOVEREIGN DEBT PRIVATE DEBT DEFICITS CORONAVIRUS COVID-19 PANDEMIC IMPACT PANDEMIC RESPONSE
Online Access:	http://documents.worldbank.org/curated/undefined/258761633705709997/A-Mountain-of-Debt-Navigating-the-Legacy-of-the-Pandemic http://hdl.handle.net/10986/36386

id	okr-10986-36386
recordtype	oai_dc
spelling	okr-10986-363862021-10-15T05:10:32Z A Mountain of Debt : Navigating the Legacy of the Pandemic Kose, M. Ayhan Ohnsorge, Franziska Sugawara, Naotaka FISCAL POLICY SOVEREIGN DEBT PRIVATE DEBT DEFICITS CORONAVIRUS COVID-19 PANDEMIC IMPACT PANDEMIC RESPONSE The COVID-19 pandemic has triggered a massive increase in global debt levels and exacerbated the trade-offs between the benefits and costs of accumulating government debt. This paper examines these trade-offs by putting the recent debt boom into a historical context. It reports three major findings. First, during the 2020 global recession, both global government and private debt levels rose to record highs, and at their fastest single-year pace, in five decades. Second, the debt-financed, massive fiscal support programs implemented during the pandemic supported activity and illustrated the benefits of accumulating debt. However, as the recovery gains traction, the balance of benefits and costs of debt accumulation could increasingly tilt toward costs. Third, more than two-thirds of emerging market and developing economies are currently in government debt booms. On average, the current booms have already lasted three years longer, and are accompanied by a considerably larger fiscal deterioration, than earlier booms. About half of the earlier debt booms were associated with financial crises in emerging market and developing economies. 2021-10-14T13:49:50Z 2021-10-14T13:49:50Z 2021-10 Working Paper http://documents.worldbank.org/curated/undefined/258761633705709997/A-Mountain-of-Debt-Navigating-the-Legacy-of-the-Pandemic http://hdl.handle.net/10986/36386 English Policy Research Working Paper;No. 9800 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	FISCAL POLICY SOVEREIGN DEBT PRIVATE DEBT DEFICITS CORONAVIRUS COVID-19 PANDEMIC IMPACT PANDEMIC RESPONSE
spellingShingle	FISCAL POLICY SOVEREIGN DEBT PRIVATE DEBT DEFICITS CORONAVIRUS COVID-19 PANDEMIC IMPACT PANDEMIC RESPONSE Kose, M. Ayhan Ohnsorge, Franziska Sugawara, Naotaka A Mountain of Debt : Navigating the Legacy of the Pandemic
relation	Policy Research Working Paper;No. 9800
description	The COVID-19 pandemic has triggered a massive increase in global debt levels and exacerbated the trade-offs between the benefits and costs of accumulating government debt. This paper examines these trade-offs by putting the recent debt boom into a historical context. It reports three major findings. First, during the 2020 global recession, both global government and private debt levels rose to record highs, and at their fastest single-year pace, in five decades. Second, the debt-financed, massive fiscal support programs implemented during the pandemic supported activity and illustrated the benefits of accumulating debt. However, as the recovery gains traction, the balance of benefits and costs of debt accumulation could increasingly tilt toward costs. Third, more than two-thirds of emerging market and developing economies are currently in government debt booms. On average, the current booms have already lasted three years longer, and are accompanied by a considerably larger fiscal deterioration, than earlier booms. About half of the earlier debt booms were associated with financial crises in emerging market and developing economies.
format	Working Paper
author	Kose, M. Ayhan Ohnsorge, Franziska Sugawara, Naotaka
author_facet	Kose, M. Ayhan Ohnsorge, Franziska Sugawara, Naotaka
author_sort	Kose, M. Ayhan
title	A Mountain of Debt : Navigating the Legacy of the Pandemic
title_short	A Mountain of Debt : Navigating the Legacy of the Pandemic
title_full	A Mountain of Debt : Navigating the Legacy of the Pandemic
title_fullStr	A Mountain of Debt : Navigating the Legacy of the Pandemic
title_full_unstemmed	A Mountain of Debt : Navigating the Legacy of the Pandemic
title_sort	mountain of debt : navigating the legacy of the pandemic
publisher	World Bank, Washington, DC
publishDate	2021
url	http://documents.worldbank.org/curated/undefined/258761633705709997/A-Mountain-of-Debt-Navigating-the-Legacy-of-the-Pandemic http://hdl.handle.net/10986/36386
_version_	1764485137134780416

A Mountain of Debt : Navigating the Legacy of the Pandemic

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