ABSTRACT China’s debt has surged significantly since the Global Financial Crisis (GFC), raising concerns about its long-term impacts. Numerous studies have examined various facets of China’s debt. To better understand this issue, we reviewed over 120 scholarly papers from EconLit, published after the GFC, and categorized findings into five key areas: determinants, effects, costs, levels and sustainability, and other aspects. This review examines the key determinants and economic effects of China’s three main debt components: corporate, government, and household debt. By synthesizing existing research, we aim to enhance understanding of China’s debt landscape, provide actionable insights for Chinese policymakers and future researchers, and offer valuable lessons for other nations.

Local government debt management system, digital finance, and regional economic resilience: A quasi-natural experiment

Urban Shrinkage and Local Government Debt Risk: Interactive Relationship and Impact Mechanism

Facilitating or crowding out? The role of local government debt in green bond issuance

Local government debt and shadow banking of non-financial enterprises: Evidence from China

As data resources become a new factor of production, public data is becoming a key driving force to promote innovation and development. Its similarity with land resources and the comparability between digital industry chain and real estate industry chain make data finance a new model to replace land finance, help local governments to broaden fiscal revenue and mitigate hidden debt risks. This project aims to explore the role of public data capitalization mechanism in promoting the construction of data finance, and help local governments obtain stable and long-term income channels by building a sustainable government data asset operation mode, so as to effectively alleviate the pressure of hidden debt risk. Research and analysis show that data finance can play a direct and indirect role in dissolving the implicit debt of local governments by providing a sustainable path of capitalization income, and can play a substitution and complementary effect in coordination with other fiscal variables under the background of the "package" debt scheme. This study provides theoretical support and practical guidance for local governments to alleviate the debt crisis by building a fiscal revenue increase framework of public data capitalization and digital industry chain.

ABSTRACT This paper investigates the implications of output gap uncertainty for the conduct of fiscal policy using a small‐scale macroeconomic model with boundedly rational agents. Specifically, agents use an adaptive updating mechanism to approximate the unobservable potential output that suffers, similarly to the Hodrick and Prescott (1997) filter, from an end‐point bias. This generates an unintendedly procyclical fiscal policy that affects the government's credibility and by extension the sovereign risk premium. Our simulations highlight the importance of this so‐called bond vigilantes channel, as well as of the government's credibility among financial markets, for the sustainability of government debt and for macroeconomic stability.

This study conducts quasi-natural experiment based on local government debt governance launched in China in 2015. Employing a progressive difference-in-differences (DID) approach, this study matches data from Chinese-listed enterprises from 2010 to 2019 to evaluate the effect of the local government debt governance on enterprise green transformation. Findings indicate that debt governance significantly promotes the green transformation of enterprises. This conclusion remains robust after multiple robustness tests. Mechanism analysis reveals that debt governance enables the green transformation of enterprises by alleviating overcapacity. Heterogeneity analysis shows that debt governance significantly promotes the green transformation of enterprises in cities with advanced industrial structures, environmental priorities, non-resource-based economies, and among non-state-owned and technology-intensive enterprises. This study offers valuable insights for countries managing public debt while promoting green transformation among enterprises.

Local government debt has increasingly become a critical challenge for fiscal sustainability and the effective delivery of public services in Zambia. This paper undertakes aanalytical desk review of Local Government Public Debt in Zambia: Risk and Strategic Management Approaches. The review is guided by three objectives which are to evaluate the nature, scale, and composition of public debt among 116 local authorities in Zambia; to analyze the associated fiscal and economic risks of public debt at the local government level in Zambia, and recommend strategic management approaches aimed at enhancing debt sustainability and improving delivery of local services. The study is based on desk review which entailed a systematic and critical examination of national policy documents and official government reports related and /or incidental to the subject matter. Through a combination of qualitative and quantitative methodologies, quantitative analysis was used to examine trends and patterns in debt accumulation, while qualitative assessment captured contextual and institutional factors influencing debt management. The key findings revealed that public debt among 116 local authorities in Zambia is predominantly arrears-based rather than driven by formal borrowing, a substantial escalation in the scale of debt and arrears over the three-year period, with total verified obligations increasing from ZMW 4.38 billion in June 2022 to ZMW 5.86 billion by June 2025, representing a 33.86% rise. The findings indicate that arrears are not confined to a single expenditure category but are widespread across operational, statutory, and development-related obligations, underscoring the systemic nature of fiscal stress within local authorities. Statutory obligations, personnel-related arrears, and unpaid supplier and contractor liabilities constitute the largest components of local government debt, with urban and economically active councils generally exhibiting higher debt levels than rural councils. The analysis further established that the current structure of local government debt poses significant fiscal and economic risks. Rising statutory penalties and interest charges are eroding already constrained fiscal space, limiting resources available for service delivery and development expenditure. Increasing utility arrears heighten the risk of service disruptions and create contingent liabilities, while arrears to suppliers and contractors impose liquidity constraints on the local private sector, raise procurement costs, and weaken local economic activity. The reliance on arrears as an implicit financing mechanism undermines budget credibility and fiscal transparency, reinforcing a cycle of fiscal fragility at the local government level. Arising from the study’s findings, the study recommends several strategic management approaches to enhance debt sustainability, including debt restructuring, liquidation plans, strengthening revenue mobilization, budgetary controls, and institutionalized monitoring and evaluation mechanisms. Further, aligning recruitment and payroll policies with fiscal capacity and engaging with credit rating agencies can improve the financial credibility and borrowing capacity of local authorities. This study contributes to the literature by providing a comprehensive, evidence-based assessment of local government debt in Zambia, highlighting both its structural drivers and systemic risks. The findings have important policy implications, informing the design of debt management strategies, enhancing fiscal discipline, improving local service delivery, and supporting the broader decentralization agenda in Zambia

I assess the effect of continued sub-replacement fertility on age-adjusted consumption per capita. Channels assessed include transfers from working-age adults to children and the elderly, the effect of the labor force growth rate on required capital investment, sustainability of government debt, the interaction of population size with fixed natural resources (including a clean environment), and the effect of population size on the speed of technological progress. To isolate the effect of low fertility from other ongoing demographic changes, I use simulation models as well as projections from the United Nations and Social Security Administration that vary fertility rates while holding other factors constant. My main finding is that the impact of low fertility is likely to be negative but small. In addition, this negative impact arrives only after a long adjustment period. An increase in fertility back to the replacement rate would lower the standard of living for several decades.

Local government debt risk and corporate risk-taking: The dual mechanisms of credit crowding-out and policy uncertainty

Manufacturing risk-free government debt

This study evaluates the Indonesian government’s fiscal accountability in managing public debt and ensuring fiscal sustainability during 2020–2024. Using a qualitative approach based on document analysis, the research examines official fiscal reports from the Ministry of Finance (State Budget/APBN, Fiscal Risk Statements, and debt disclosures), complemented by audit findings from the Supreme Audit Agency (BPK) and triangulated with verified public statements from national news sources. Data were reduced and coded into two main categories: fiscal sustainability and government debt, and interpreted using principles of public sector accountability and transparency under Law No. 17 of 2003 and Law No. 1 of 2004. Findings indicate fiscal accountability through compliance with debt and deficit rules, progressive post-pandemic deficit reduction, and the publication of debt composition and issuance strategies. However, accountability gaps exist in fiscal risk disclosure, especially regarding contingent liabilities and medium-term debt exposures, which were reported narratively but seldom quantified. Overall, Indonesia’s fiscal practices 2020–2024 show strong procedural accountability but moderate explanatory accountability, suggesting future transparency can be strengthened via deeper analytical disclosure. This study contributes to public sector accounting literature by providing evidence-based insights on fiscal governance post-economic crisis.

Subject. Debt problems of the Russian economy. Objectives. Identify the debt problems of the Russian economy. Methods. The theoretical basis of the study was the provisions of the neoclassical and Keynesian directions of economic theory concerning the influence of monetary policy on credit activity, savings and investments. The methodological framework of the research is based on the complex application of statistical and graphical analysis methods, which allows identifying and interpreting key trends and structural shifts in the Russian economy. Results. The key factors determining the debt problems of the Russian economy have been identified, including the excessive growth of household debt relative to non-financial organizations, reducing their ability to consume and increasing the risks to the functioning of non-financial organizations. The volatility of loans for the economy and money supply generates unpredictability in the credit policy of banks caused by problems with liquidity and tight monetary policy of the Bank of Russia, causing a decrease in lending activity, slowing economic growth and complicating long-term planning for companies. It is shown that the high value of the difference between the key rate and inflation increases the cost of borrowing for businesses and the population, and sharp fluctuations in its dynamics create macroeconomic instability. The active growth in the volume of federal loan bonds increases budget expenditures on servicing domestic government debt, and the volatility in the ratio of deposits from credit institutions in the Bank of Russia to the trade balance causes a decrease in the stability of the financial system. Conclusions. The debt problems of the Russian economy are caused by an imbalance between corporate and private debt, volatility of credit activity, tight monetary policy and growing dependence on domestic government debt.

The economic development of China has typically been characterized by the expansion of local government debt alongside the rising risk of a real estate bubble. However, literature that empirically analyzes the risk transmission path between the two factors is limited. This research analyzes the effect and operation mechanism of real estate bubbles on local government debt through a double fixed-effects model, using macroeconomic data from 278 Chinese cities from 2014 to 2022. The empirical results indicate that real estate bubbles have begun to threaten local government debt. This effect is realised through three main channels: deepening local governments’ dependence on land finance, weakening their financial self-sufficiency, and raising local governments’ expectations of external assistance. Heterogeneity analysis reveals that such risk shocks are particularly pronounced in regions with less developed economies and rapid population growth.

ABSTRACT Exploiting the implementation of China’s 2015 Budget Law as a quasi-natural experiment, this article investigates the impact of local government debt constraints on entrepreneurial activity. Using a panel dataset of 279 prefecture-level cities from 2009 to 2022, we employ a difference-in-differences (DID) model with continuous treatment intensity for empirical estimation. We find that tightening constraints on local government borrowing significantly fosters firm entry. Mechanism analyses indicate that the policy operates primarily through three channels: alleviating corporate financial constraints, enhancing infrastructure investment efficiency, and improving the business environment. Heterogeneity analyses reveal stronger effects in capital-intensive industries, cities with higher fiscal pressure, private enterprises, and sectors and regions with lower degrees of administrative monopoly. From the perspective of debt governance, this article uncovers the positive spillover effects of fiscal reform on entrepreneurial vitality, providing novel empirical evidence on the interplay between public finance and entrepreneurial activity.

Abstract Speculation has long been thought to have significant economic effects, but it is difficult to measure, making it challenging to examine these effects empirically. In this paper we measure speculation in the United Kingdom since 1785 by using business and financial reporting in The Times newspaper. Our monthly speculation index reveals four distinct epochs of speculation in the United Kingdom. Epochs of high speculation coincide with higher stock market returns and higher economic growth, while low‐speculation periods coincide with high levels of government debt and financial repression. We find that low interest rates foment the development of higher speculation, and that eras of higher speculation are often followed by greater banking instability.

The present paper analyzes the transitional dynamics of the government-debt-to-GDP ratio in an economy with constant interest rates, economic growth, and fiscal deficit growth. By explicitly modeling the joint evolution of government debt, fiscal deficits, and GDP, the present paper derives closed-form expressions for the debt-to-GDP ratio and characterizes its dynamic behavior. The analysis shows that even when standard long-run sustainability conditions—such as an interest rate lower than the economic growth rate—are satisfied, the debt-to-GDP ratio need not evolve monotonically. Instead, it may exhibit a single-peaked trajectory, rising temporarily before converging in the long run. The present paper identifies precise conditions under which such non-monotonic dynamics arise and illustrates them with numerical examples.

ABSTRACT This study investigates the heterogeneous impact of explicit and implicit local government debt in China. Using a comprehensive sample of A‐share listed firms, we find that the two forms of debt have contrasting effects. Local government implicit debt significantly suppresses firm‐level green innovation, while explicit debt promotes it. The mechanism analysis confirms that implicit debt crowds out credit resources, leading to reduced long‐term credit access, shorter debt maturity and higher borrowing costs for firms, thereby hindering their innovation efforts. Conversely, explicit debt facilitates resource allocation and financial stability, enhancing the firm's capacity for green R&D. Crucially, heterogeneity tests reveal that these detrimental effects are magnified by the local government implicit debt pressure, with the negative impact of implicit debt being significantly exacerbated in high‐pressure regions. Furthermore, the adverse effects are disproportionately borne by firms facing structural debt market discrimination. Non‐SOEs and small firms experience the strongest dampening effect from implicit debt, while SOEs and large firms are largely insulated. Our findings highlight the need for greater transparency in local government financing and offer novel policy insights for optimising fiscal policy to support green technological progress.

ABSTRACT The burgeoning issue of local government debt has emerged as a pivotal factor influencing the trajectory of sustainable economic growth in China. Using a novel county-level panel data spanning from 2015 to 2023, we document an interesting point: Despite the designed self-liquidation mechanism of local government special bonds(LGSBs), there is an inverted U-shaped relationship between LGSBs scale and economic growth. Models with instruments variables and GMM estimations confirms the robustness of our findings. Mechanism analysis reveals three primary channels through which LGSBs influence local economy: (1) land transaction volumes, (2) allocations of special bond quotas, and (3) public investment under the pressures from debt repayment obligations. Heterogeneity analysis shows that the effects are more pronounced within counties with nascent economic structures and heightened fiscal duress. These findings offer novel insights into the interplay between fiscal restructuring and local economy, highlighting the unintended consequences that LGSBs fails to overcome growth constraints.