The Global Outlook for Government Debt over the Next 25 Years: Implications for the Economy and Public Policy: Policy Analyses in International Economics 94 Book

Preface vii

Acknowledgments xi

The Global Outlook for Government Debt over the Next 25 Years 1

Overview 1

Introduction 3

Projected Paths of Government Debt 4

The Burden of Debt and Fiscal Limits 20

Paths to Safety 40

Conclusion 49

References 51

About the Authors 57

Index 59

Tables

Table 1 Fiscal and economic assumptions 6

Table 2 General government net debt projections (percent of GDP) 11

Table 3 Effective interest rate on government debt (percent) 22

Table 4 Net interest payments on government debt (percent of GDP) 29

Table 5 Adjustment paths for general government net debt (percent of GDP) 41

Figures

Figure 1 General government nee debt projections-United States 12

Figure 2 General government net debt projections-Japan 13

Figure 3 General government net debt projections-Euro area 14

Figure 4 General government net debt projections-Advanced economies 15

Figure 5 General government net debt projections-Emerging economies 16

Figure 6 General government net debt projections-World 17

Figure 7 Effective interest rate on general government debt-United States 23

Figure 8 Effective interest rate on general government debt-Japan 24

Figure 9 Effective interest rate on general government debt-Euro area 25

Figure 10 Effective interest rate on general government debt-Advanced economies 26

Figure 11 Effective interest rate on general government debt-Emerging economies 27

Figure 12 Net debt interest payments-United States 30

Figure 13 Net debt interest payments-Japan 31

Figure 14 Net debt interest payments-Euro area 32

Figure 15 Net debt interest payments-Advanced economies 33

Figure 16 Net debt interest payments-Emerging economies 34

Figure 17 Adjustment paths for general government debt-United States 42

Figure 18 Adjustment paths for general government debt-Japan 43

Figure 19 Adjustment paths for general government debt-Euro area 44

Figure 20 Adjustment paths for general government debt-Advanced economies 45

Figure 21 Adjustment paths for general government debt-Emerging economies 46

Figure 22 Adjustment paths for general government debt-World 47

Box

Box 1 Statistical estimates of the effect of government debt on interest rates 9