publication

The origins and resolution of debt crises: it is not always fiscal!

Authors:
Ugo PANIZZA
2013

This paper shows that debt crises do not always have a fiscal nature and suggests that fiscal retrenchment may not be the optimal response to a crisis that did not originate from irresponsible fiscal policies. The paper starts by discussing the origin of debt crises and the unexplained part of public debt and for avoiding debt explosions linked to financial crises or poor debt management. The paper concludes with a discussion on liquidity and solvency crises.