Economie européenne

2 janvier 2012

Lessons from a century of large public debt reductions and build-ups

Quatre économistes du FMI ont analysé plus en détail la dette publique de 178 pays depuis 1880. Je trouve leurs données assez intéressantes, mais je n’en tire pas de conclusion immédiate. Surprenant néanmoins de constater que plusieurs pays sont passés par des niveaux de dette publique spectaculaires (> 200% du PIB) sans pour autant faire défaut.

Lessons from a century of large public debt reductions and build-ups
S. M. Ali Abbas,  Nazim Belhocine, Asmaa El-Ganainy & Mark Horton © – 18 december 2011

As policymakers continue to grapple with high debts and the troubles that come with them, this column looks at the lessons from data on public debt in 178 countries stretching back as far as 1880. It argues that when faced with an unsustainable debt burden, slow but steady adjustment is the way to go.


Figure 1. Debt-to-GDP ratios across country groups, 1880–2009 (Group PPPGDP-weighted averages, in percent of GDP)


Figure 2. Identified episodes of debt-to-GDP Decreases (in percent of GDP)


Figure 3. Identified episodes of debt-to-GDP increases (in percent of GDP)


Implications for current debt debate

The composition of the 11 debt reductions observed during 1880–1914, the first era of financial globalisation, is quite similar to that witnessed in the post-1970 financially liberalised period. In both cases, the debt ratio reductions were mainly caused by large primary surpluses. In fact, the post-1970s debt reductions are accounted for almost entirely by primary surplus improvements. However, insofar as such improvements are boosted by the cycle and easier to implement in the context of strong growth, these results may somewhat understate the true role of growth in debt declines; strong growth was a consistent feature of most debt decline episodes.2 That conventional fiscal adjustment and growth have led the way in periods of global financial integration is intuitive as well as consistent with previous studies (such as IMF 2010).

Looking ahead, highly indebted advanced economies are confronted by a challenging landscape. The pursuit of unconventional options – such as reverting to financial repression policies akin to those taken during the post-WWII years, reducing the burden of domestic debt through higher inflation, or restructuring – may be a tempting shortcut but it comes with high costs. A gradual but steady adjustment is the right way to go. History shows an orderly adjustment is much easier in the context of sustained medium-term growth. This suggests that there is a premium on both implementing structural measures that improve competitiveness and the business environment, and designing fiscal adjustment in a manner that minimises the drag on growth.

Il y a également un article nettement plus technique dans l’IMF Economic Review: Historical Patterns and Dynamics of Public Debt—Evidence From a New Database


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