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Corona Troubles

The coronavirus pandemic is set to rob the global economy of more than $5 trillion of growth over the next two years, greater than the annual output of Japan. That’s the warning from Wall Street banks as the world plunges into its deepest peacetime recession since the 1930s after the virus forced governments to demand that businesses close and people stay home. To deal with this, Governments across the globe are providing unprecedented levels of fiscal and monetary stimulus for economies to make up the lost ground. We see that these stimulus are being provided on the back of large borrowings. But with public debt comes the fiscal cost and its sustainability. In a study by International Monetary Fund (IMF) about the differential between interest paid on government debt and the economy’s nominal growth rate, a key indicator of an economy’s long-run debt sustainability, gathers evidence on the gap between interest and growth rates for 24 advanced economies and 31 emerging economies over the last two centuries. You can download the working paper from -…/r-minus-g-negative-Can-We-Sleep-More-…

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