World Economics - Insight , Analysis and Data

World Economics - Measuring the World Economy
Debt and Deleveraging
Susan Lund and Charles Roxburgh, World Economics, June 2010
In this article, McKinsey Global Institute researchers assess the increases in debt and leverage in ten mature economies and four emerging economies – breaking down that data by each country’s financial, household, non-financial business and government sectors. The authors then analyse the sustainability of current levels of leverage in those sectors and construct a ‘heat map of deleveraging’. The map shows which sectors in which economies are most likely to deleverage. Third, the authors analyse 45 episodes of deleveraging since 1930, focusing on the 32 episodes that occurred after a financial crisis. From these episodes, the authors draw insights into the macroeconomic channels through which a country can deleverage. Finally, they discuss the policy and business implications of the findings.

Related thinking:
    Life after Debt
Miranda Xafa, World Economics, March 2013
    The Liquidity Consequences of the Euro Area Sovereign Debt Crisis
William A. Allen and Richhild Moessner, World Economics, March 2013
    The Great Depression, the Great Recession and the Next Crisis
Chong-Yah Lim and Dr Hui-Ying Sng, World Economics, September 2011

Download paper

© Copyright World Economics Ltd. 2017