The Blind Side of Public Debt Spikes

Laura Jaramillo, Carlos Mulas-Granados and Elijah Kimani

No 2016/202, IMF Working Papers from International Monetary Fund

Abstract: What explains public debt spikes since the end of WWII? To answer this question, this paper identifies 179 debt spike episodes from 1945 to 2014 across advanced and developing countries. We find that debt spikes are not rare events and their probability increases with time. We then show that large public debt spikes are neither driven by high primary deficits nor by output declines but instead by sizable stock-flow adjustments (SFAs). We also find that SFAs are poorly forecasted, which can affect debt sustainability analyses, and are associated with a higher probability of suffering non-declining debt paths in the aftermath of public debt spikes.

Keywords: WP; debt spike; spike episode; debt accumulation; debt forecast; path syndrome; Public Debt; Debt Spikes; Stock Flow Adjsutment; SFA; Debt Forecasting; debt decomposition analysis; debt decrease; Debt sustainability analysis; Contingent liabilities; Government debt management; Inflation; Global; SFA component; General government debt (search for similar items in EconPapers)
Pages: 32
Date: 2016-10-14
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=44336 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2016/202

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().