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 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.
|Date of creation:||31 Jan 2001|
|Date of revision:|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bruno, Michael & Easterly, William, 1995.
"Inflation crises and long-run growth,"
Policy Research Working Paper Series
1517, The World Bank.
- Kling, Jeff & Pritchett, Lant, 1994. "Where in the world is population growth bad?," Policy Research Working Paper Series 1391, The World Bank.
- Dan Ben-David & David H. Papell, 1998.
"Slowdowns And Meltdowns: Postwar Growth Evidence From 74 Countries,"
The Review of Economics and Statistics,
MIT Press, vol. 80(4), pages 561-571, November.
- Dan Ben-David & David H. Papell, 1997. "Slowdowns and Meltdowns: Postwar Growth Evidence from 74 Countries," NBER Working Papers 6266, National Bureau of Economic Research, Inc.
- Ben-David, Dan & Papell, David, 1995. "Slowdowns and Meltdowns: Post-war Growth Evidence from 74 Countries," CEPR Discussion Papers 1111, C.E.P.R. Discussion Papers.
- Ben-David, D. & Papell, D.H., 1996. "Slowdowns and Meltdowns: Post-War Growth Evidence from 74 Countries," Papers 9-96, Tel Aviv.
- Pritchett, Lant, 2000. "Understanding Patterns of Economic Growth: Searching for Hills among Plateaus, Mountains, and Plains," World Bank Economic Review, World Bank Group, vol. 14(2), pages 221-50, May.
- Alan J. Auerbach & William G. Gale, 2000.
"Perspectives on the Budget Surplus,"
NBER Working Papers
7837, National Bureau of Economic Research, Inc.
- Pritchett, Lant, 2000.
"The Tyranny of Concepts: CUDIE (Cumulated, Depreciated, Investment Effort) Is Not Capital,"
Journal of Economic Growth,
Springer, vol. 5(4), pages 361-84, December.
- Pritchett, Lant, 2000. "The tyranny of concepts - CUDIE (Cumulated, Depreciated Investment Effort) is NOT capital," Policy Research Working Paper Series 2341, The World Bank.
- Fischer, Stanley & Easterly, William, 1990. "The Economic of the Government Budget Constraint," World Bank Research Observer, World Bank Group, vol. 5(2), pages 127-42, July.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2531. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.