Emerging research issues in sovereign debt management

Recent decades have witnessed a substantial rise in public debt worldwide. The increase has been driven primarily by fiscal responses to major crises, such as the 2008-2009 global financial crisis and the still-ongoing COVID-19 pandemic. Such sharp increases in public debt worldwide raise important questions regarding fiscal sustainability, risks of debt crises, and the appropriate policies to minimize such risks. There is significant empirical evidence that large, sustained increases in the public debt increase the vulnerability to debt crises, especially in developing countries. It is therefore not surprising that a growing academic or policy-oriented literature is focusing on the issues of public debt sustainability and management. This chapter aims to provide a compact and reader-friendly overview of the main findings and conclusions of such literature. It focuses on three main sets of interrelated issues: assessing public debt sustainability; options to address significant risks of unsustainability; and managing effectively a sustainable public debt.