For many developed countries, debt-GDP ratios have increased in recent years and are projected to continue increasing under current economic and policy trajectories. But debt- GDP ratios alone do not tell us how long countries have before they must make fiscal adjustments or how large these adjustments need to be. The factors contributing to shortterm debt accumulation differ substantially from those that will affect debt accumulation over Major Economies term the longer term. This paper is about the fiscal situations and prospects for developed economies around the world, including a discussion of the risks of cross-border contagion and the potential role of fiscal rules and institutions.
Alan J. Auerbach is the Robert D. Burch Professor of Economics and Law, Director of the Burch Center for Tax Policy and Public Finance, and former Chair of the Economics Department at the University of California, Berkeley. He is also a Research Associate of the National Bureau of Economic Research and previously taught at Harvard and the University of Pennsylvania, where he also served as Economics Department Chair. Professor Auerbach was Deputy Chief of Staff of the U.S. Joint Committee on Taxation in 1992 and has been a consultant to several government agencies and institutions in the United States and abroad. A former Vice President of the American Economic Association, he was Editor of that association's Journal of Economic Perspectives and is now Editor of its new American Economic Journal: Economic Policy. Professor Auerbach is a Fellow of the American Academy of Arts and Sciences and of the Econometric Society.