The Peterson Institute for International Economics (PIIE) and the McKinsey Global Institute (MGI) cohosted a conference on February 18, 2015, on the global state of debt and deleveraging in the private and public sectors and the available policy responses. Panel discussions addressed the rise of sovereign and household debt post-crisis, drawing on PIIE and MGI research as well as the participation of high-level colleagues from the official sector.
Panel I began with a presentation by Sean Hagan, general counsel at the International Monetary Fund (IMF), on the IMF's recent report suggesting reforms to enable sovereign debt restructuring. Anna Gelpern, nonresident senior fellow at PIIE, Adair Lord Turner, senior fellow at the Institute for New Economic Thinking and the MGI, and Ángel Ubide, senior fellow at PIIE, discussed the merits and issues of this new initiative.
Panel II launched of MGI's latest report, Debt and (Not Much) Deleveraging, presented by Susan Lund, a report coauthor and partner at MGI. In this report, MGI finds that in the wake of a global crisis caused by excessive debt, there has been almost no deleveraging. The focus of this report is to find ways to avoid credit boom-bust cycles and use a full range of policy tools to manage high debt. The Honorable Karen Dynan, assistant secretary for economic policy and chief economist at the US Treasury, and Nicholas R. Lardy, Anthony M. Solomon Senior Fellow at PIIE, offered their own assessments of the extent of debt and deleveraging in the US and Chinese economies, and the availability of tools in each economy to respond to debt problems. Michael Marrese, managing director and head of economic research at JP Morgan Chase, presented an assessment of the European and emerging markets.