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Globalization has deeply transformed the world economy: rule of law gained ground, especially in Eastern Europe and Latin America, poverty fell significantly, particularly in Asia, and capitalism triumphed, sometimes with massive state intervention. In the meantime, financial interdependence grew dramatically. The core argument of this book is that the high degree of financial interdependence forged during the "golden age" of globalization from 1991-2016 is now the main impediment to the reduction of the elevated public debts observed in many countries. Therefore, it investigates how the world economy may be deleveraged and how interdependence may be reduced or, wherever possible, made compatible with a deleveraging process.
Readers of this book will gain a comprehensive understanding of the multifaceted challenges stemming from high public debt burdens. Drawing on insights from economics, law, and political science, it argues that public debts may be reaching unsustainable levels in advanced as well as developing and emerging countries. This evolution is exacerbated by various forms of interdependence in which governments have been entangled since the globalization years. The book offers an overview of key issues, such as the interconnectedness between governments and "too-big-to-fail" financial institutions; the way financial crises lead to massive bailouts and significant increases in public debts; the debt sustainability problems posed by higher interest rates, geopolitical tensions, and climate change and the lack of coordination between the IMF and the Paris Club, on the one hand, and China, on the other hand, during the debt restructuring processes of developing countries.
Owing to its multidisciplinary approach, the book will attract the interest of scholars and students from wide ranging fields, including political scientists, economists, and lawyers.
List of contents
1. Globalization, High Public Debt, and Interdependence: A Primer
Part I: The Public-Private Nexus 2. The Lender of Last Resort and Moral Hazard 3. Legal and Political Toolkits to Rescue Major Financial Institutions
Part II: Sovereign Risk: A Complex, Pervasive Threat 4. The Credit Position of Eurozone Members Contingent on Well-Calibrated Fiscal Policies 5. The Elusive Assessment of U.S. Sovereign Risk 6. The Endless Fall of Argentina's Credit Position, 1919-2025.
Part III: The Constraints on Fiscal Policies 7. Fiscal Policy Choices Around Climate Change: An Evaluation of the European Union, the United States, and China 8. Rethinking Fiscal Policy: Towards A "Debt Targeting" Regime
Part IV: Restructuring Sovereign Debts: An Impossible Duty? 9. How Emerging and Developing Countries Can Cope with Unconventional Lending Practices and Overcome the Ongoing Debt Crisis 10. Recent Challenges to the IMF's Role in Sovereign Restructurings
About the author
Aline Darbellay is an Assistant Professor of Capital Markets Law at the University of Zurich, Switzerland.
Norbert Gaillard is an economist and independent consultant at NG Consulting.
Michael Waibel is a Professor of International Law at the Faculty of Law, University of Vienna, Austria.
