M. Ayhan Kose, Franziska Ohnsorge, Carmen Reinhart, Kenneth Rogoff, 03 November 2021

Global government debt soared in last year’s pandemic-induced global recession. It may now be tempting to rely on the post-pandemic growth and inflation rebound to reduce debt burdens. This column argues, however, that medium-term growth prospects are dimming and inflation helps reduce debt burdens only under particular circumstances. As a result, some developing economies may eventually need to resort to debt default to restore fiscal sustainability, with the associated heavy economic and political cost. The global community can help by coordinating prompt and efficient debt relief and restructuring. 


CEPR Policy Research