Abstract
Since the global economic recovery started in 2009, the United States and other advanced economies have seen their public debt quickly rising as a result of their financial institutions’ balance sheet repair through capital injection and household debt reduction. Of the balance sheets of government, financial, household, and corporate sectors, only the corporate balance sheet remained relatively stable throughout the crisis, providing support for sustainable economic recovery. Based on an analysis of these balance sheets and policy orientation, this chapter concludes that global inflation and costs of capital, labor, and other inputs are set to rise. In contrast, the global growth is set to slow and global economic fluctuation will intensify, unless we can soon see major breakthroughs in technological innovations, in structural reforms in advanced economies, and in structural reforms in emerging economies and global governance. Keywords:balance sheets of government; capital injection; financial crisis; global economic recovery; global inflation; household debt reduction; United States
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