# Managing Debt in an Overleveraged World

1 Opinion April 27, 2016 Project Syndicate ![A. Michael Spence](/sites/default/files/styles/246w/public/assets/images/con_032670.jpg?itok=cxjGfIlv) By A. Michael Spence > ...the right kind of public investment would probably spur more private-sector investment. Identifying such investment is where today’s debt debate should be.

What ever happened to deleveraging? In the years since the 2008 global financial crisis, austerity and balance-sheet repair have been the watchwords of the global economy. And yet today, more than ever, debt is fueling concern about growth prospects worldwide.

The McKinsey Global Institute, in a study of post-crisis debt trends, notes that gross debt has increased about $60 trillion – or 75% of global GDP – since 2008. China’s debt, for example, has increased fourfold since 2007, and its debt-to-GDP ratio is some 282% – higher than in many other major economies, including the United States.

A global economy that is levering up, while unable to generate enough aggregate demand to achieve potential growth, is on a risky path. But to assess how risky, several factors must be considered.

Read the full article as published in [Project Syndicate](https://www.project-syndicate.org/commentary/debt-management-overleveraged-global-economy-by-michael-spence-2016-04).

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*A. Michael Spence is a William R. Berkley Professor in Economics & Business.*## More Opinions from Michael Spence

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