The Global Outlook for Government Debt Over the Next 25 Years

by Gagnon, Joseph E.; Hinterschweiger, Marc (CON)

• ISBN13: 9780881326215
• ISBN10: 0881326216
• Format: Paperback
• Copyright: 2011-06-30
• Publisher: Peterson Inst for Intl Economics

Summary

This study addresses a fundamentally new feature or the contemporary world economy: the simultaneous buildup of very large public deficits and debt positions in virtually all of the advanced countries. The recent global financial crisis sharply accelerated this fiscal deterioration, but it was already well underway in some countries, including the United States, where demographic prospects have posed extremely worrisome trajectories for a number of years.

Author Biography

Joseph E. Gagnon, senior fellow since September 2009, was visiting associate director, Division of Monetary Affairs (2008-09) at the US Federal Reserve Board. Previously he served at the US Federal Reserve Board as associate director, Division of International Finance (1999-2008), and senior economist (1987-90 and 1991-97). He has also served at the US Treasury Department (1994-95 and 1997-99) and has taught at the University of California's Haas School of Business (1990-91). He has published numerous articles in economics journals, including the Journal of International Economics, Journal of Monetary Economics, Review of International Economics, and Journal of International Money and Finance, and has contributed to several edited volumes. He received a BA from Harvard University in 1981 and a PhD in economics from Stanford University in 1987. Marc Hinterschweiger has been a research analyst with the Peterson Institute since 2008. He is also a PhD candidate in economics at Ludwig-Maximilians University (LMU) in Munich, Germany. His research focuses on the transmission mechanism of monetary policy, asset prices, and financial crises. He previously worked at the Rhenish-Westfalian Institute for Economic Research (RWI) in Essen, Germany. He holds a BA in economics (2005) and a BA in international affairs (2006) from the University of St. Gallen, Switzerland. He earned a master's degree in public policy from Harvard University's Kennedy School of Government (2008), where he was a McCloy scholar specializing in international trade and finance. He has been a member of the German National Academic Foundation (Studienstiftung des deutschen Volkes) since 2002.

Table of Contents

Preface	p. vii
Acknowledgments	p. xi
The Global Outlook for Government Debt over the Next 25 Years	p. 1
Overview	p. 1
Introduction	p. 3
Projected Paths of Government Debt	p. 4
The Burden of Debt and Fiscal Limits	p. 20
Paths to Safety	p. 40
Conclusion	p. 49
References	p. 51
About the Authors	p. 57
Index	p. 59
Tables
Fiscal and economic assumptions	p. 6
General government net debt projections (percent of GDP)	p. 11
Effective interest rate on government debt (percent)	p. 22
Net interest payments on government debt (percent of GDP)	p. 29
Adjustment paths for general government net debt (percent of GDP)	p. 41
Figures
General government nee debt projections-United States	p. 12
General government net debt projections-Japan	p. 13
General government net debt projections-Euro area	p. 14
General government net debt projections-Advanced economies	p. 15
General government net debt projections-Emerging economies	p. 16
General government net debt projections-World	p. 17
Effective interest rate on general government debt-United States	p. 23
Effective interest rate on general government debt-Japan	p. 24
Effective interest rate on general government debt-Euro area	p. 25
Effective interest rate on general government debt-Advanced economies	p. 26
Effective interest rate on general government debt-Emerging economies	p. 27
Net debt interest payments-United States	p. 30
Net debt interest payments-Japan	p. 31
Net debt interest payments-Euro area	p. 32
Net debt interest payments-Advanced economies	p. 33
Net debt interest payments-Emerging economies	p. 34
Adjustment paths for general government debt-United States	p. 42
Adjustment paths for general government debt-Japan	p. 43
Adjustment paths for general government debt-Euro area	p. 44
Adjustment paths for general government debt-Advanced economies	p. 45
Adjustment paths for general government debt-Emerging economies	p. 46
Adjustment paths for general government debt-World	p. 47
Box
Statistical estimates of the effect of government debt on interest rates	p. 9
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