Build-up of public debt causes longer recessions for EMs – paper

imf
IMF paper investigates relationship between debt and economic performance
Bruno Sanchez-Andrade Nuño

Emerging market economies are more likely to be affected by public debt build-ups due to a “less supportive” fiscal policy, a paper published by the International Monetary Fund has found.

Using data from a large number of emerging markets, Lorenzo Forni and Marco Bernardini study the relationship between debt and economic performance in “bad times”.

The authors note that despite the unlikelihood of “rapid” public debt build-ups causing financial crises, in emerging markets they are associated

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