Professor Olivier Blanchard is the Ex-Chief Economist of the IMF. In his talk, he sheds light on debt sustainability in theory and practice as he goes over the “textbook” view of the dynamics of debt-to-GDP ratio before expanding on the implications of debt under secular stagnation. He highlights the use of stochastic debt sustainability analysis to measure the degree to which debt is sustainable given uncertainty. Lastly, our guest stresses the importance of financial protection in the Covid-19 context and advises that governments should aim to decrease debt from 2022 onwards if aggregate demand is solid enough.
