Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/299465 
Year of Publication: 
2023
Series/Report no.: 
IDB Working Paper Series No. IDB-WP-1491
Publisher: 
Inter-American Development Bank (IDB), Washington, DC
Abstract: 
During the pandemic, public debt in Latin America and the Caribbean rose to more than 70 percent of GDP, and countries are now attempting to lower debt ratios. We analyze past debt reduction episodes and find inflation and the real interest rate were the most frequent main drivers, while higher growth, fiscal consolidation and debt restructuring were relatively rare. Interestingly, inflation episodes tended to be with independent central banks and low real interest rates, highlighting the value of monetary credibility. We find debt reduction is not associated with a rise in inequality nor in unemployment, and growth or fiscal consolidation may improve these indicators.
Subjects: 
Debt
Fiscal policy
Inflation
Debt restructuring
JEL: 
E62
F34
H63
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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