- Additional Authors
- Description
- 36 p.; 21 x 29.7cm.
- Summary
- Debt levels have surged since the mid-1990s and have reached historic highs across the OECD. High debt levels can create vulnerabilities, which amplify and transmit macroeconomic and asset price shocks. Furthermore, high debt levels hinder the ability of households and enterprises to smooth consumption and investment and of governments to cushion adverse shocks. The empirical evidence suggests that when private sector debt levels, particularly for households, rise above trend the likelihood of recession increases. Measures of financial leverage give less warning and typically only deteriorate once the economy begins to slow and asset prices are falling. Government debt typically rises after the onset of a recession, suggesting that there is a migration of debt across balance sheets. Some policies, such as robust micro prudential regulation and frameworks to deal with debt overhangs and maintain public debt at prudent levels, can help economies withstand adverse shocks. Other policy options, such as addressing biases in tax codes that favour debt financing and targeted macro-prudential policies, will help bring down debt levels and address future run ups in debt.
- Series Statement
- OECD Economics Department Working Papers, 1815-1973 ; no.1003
- Uniform Title
- OECD Economics Department Working Papers, no.1003.
- Subject
- Economics
- LCCN
- 10.1787/5k8xb76rhstl-en
- OCLC
- oecd-lib-003807
- Title
Debt and Macroeconomic Stability [electronic resource] / Douglas Sutherland ... [et al]
- Imprint
Paris : OECD Publishing, 2012.
- Series
OECD Economics Department Working Papers, 1815-1973 ; no.1003
OECD Economics Department Working Papers, 1815-1973 ; no.1003.
- Connect to:
- Indexed Term
Economics
- Added Author
Sutherland, Douglas.
Hoeller, Peter.
Merola, Rossana.
Ziemann, Volker.
- Other Standard Identifier
10.1787/5k8xb76rhstl-en doi