Already before the outset of the global pandemic, public debt loomed at historically high levels in all but a few advanced economies. The pandemic-related surge in government financing needs has resulted in OECD governments issuing a record amount of debt. Questions around the sustainability of this growing debt burden have taken centre stage in accounts of public finance. What is largely absent in these debates is the question of how governments actually borrow. The budgetary constraints of debt are not merely a function of debt levels, but are influenced by the ways in which public debt is planned, issued and managed. In the UK, 2019/20 debt interest payments, while benefiting from low interest rates, amounted to £48 billion – more than defence spending. In spite of its economic and political importance, public debt management has received scant attention and continues to be clouded with technocratic obscurity. The arcane nature of public debt management has allowed consequential reforms in debt management agencies to largely fly under public and academic radars. This ESRC-funded study seeks to give a comprehensive account of this overlooked revolution.
Starting in the 1980s, debt management functions in rich economies have been handed over to newly created debt management offices, which now enjoy far-reaching policy independence in managing sovereign debt. Who are these agencies which manage over 50 trillion US-Dollars across OECD countries? How can we explain the transformation of public debt management, both regarding institutional arrangements and new managerial practices? And what are the consequences and challenges of this silent revolution?
This project on the operational arm of debt management seeks to throw light into an overlooked corner of public finances. ToPDeM will theorise and analyse the diffusion of new practices in sovereign debt management. In so doing, this research will combine evidence from statistical analyses of 24 advanced economies with an in-depth comparative case study of 3 countries demonstrating variation in institutional outcome (the UK, Germany, and Denmark).