Questions tagged [debt]

An obligation to pay another party at some point in the future. Examples include national debt, corporate bonds, and household credit.

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Why don't governments exploit negative interest rates more than they currently do?

At the moment many governments, such as Finland's, are able to borrow money at negative interest rates. My question is: why don't they loan as much money as possible while interest rates are negative? ...
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On a Dalio youtube video

The following video https://www.youtube.com/watch?v=PHe0bXAIuk0 argues that credit is the principal force behind the business cycle. Is this considered to be a established truth within some school ...
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Do the republican tax cuts cost more than forgiving student loan debt?

It is alleged by this article in the Guardian that the republican tax cuts cost more money than the total student loan debt bubble. The accuracy of this claim was briefly discussed in this post via ...
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Why does a weaker currency make sovereign debt cheaper?

Investopedia tells me that a weaker currency will reduce sovereign debt burdens. It is quoted as saying 'a weaker currency makes [these] payments effectively less expensive over time.' However, I ...
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How to calculate indentical cash flows?

So i have this question: Homemade leverage Companies A and B differ only in their capital structure. A is financed 30% debt and 70% equity; B is financed 10% debt and 90% equity. The debt of both ...
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why is it always said that a CAD must be financed by borrowing from foreign countries

a current account deficit (CAD) means you have money leaking out of your country and going to ROW (rest of world). i see here (https://www.imf.org/external/region/tlm/rr/pdf/fpp5.pdf) that it can be '...
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How to calculate the after tax WACC

So i have this question: Assume the following data for U&P Company: Debt (D) = $100 million; Equity (E) =$300 million; rD = 6%; rE = 12%; and TC = 30%. Calculate the after-tax weighted average ...
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How did the UK become so indebted?

In 2011, household, financial, and business debts stood at 420% of GDP in the UK. This doesn't sound like a very good state of affairs (am I wrong?). If this is a negative state of affairs how did ...
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Is it possible to repay the world debt? If not, why do we care?

First of all, let me apologize if the coming questions may sound stupid to expert. I am no expert in economics, I have no training nor I have followed any traditional curse. I am just curious (and ...
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What is the opposite of debt?

In trade, the opposite of trade deficit is trade surplus. In other words, the negative deficit is called surplus. And then, what is the term for negative debt? Say for example Bank A owes 5 million ...
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Is it possible to pay the internal debt of the country and to cover the budget deficit by increasing taxes?

Say for example the US govt. is putting an extra tax of 10% on the incomes of the people earning more than the average income. To make it easier, only tax the people earning more than 110% of the ...
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What's the term for the debt you have to pay today?

Say that a company has a debt of 10 million $US But from that debt, the company has to pay 2 million $US today. The rest of the debt has to be payed next year and later. Is there a term for the debt ...
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Calculating the weighted average cost of capital

Question : Provided that interest on debt is 12%, dividend to share holders are 15%. Calculate the weighted average cost of capital if debt is 70% and equity is 30%. Given, tax rate is 20%. I know, ...
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What country has the highest requirements for loans?

I was looking to find countries with the toughest regulations on loans(general loans not any specific ones) By that I mean: I mainly care to know where it is toughest for people to get a loan from a ...
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Why bonds held by foreign investors is greater than total bond issued?

Total bond issued is reported by BIS debt securities data. Let BIS denote this amount. Bonds held by foreign investors is reported by Balance of payment statistics (IMF). It is the portfolio debt ...
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is there a way in NIPA accounts to see a measure of size/change in private debt stock?

is there a way in NIPA accounts to see a measure of size/change in private debt stock , and how is it measured? if not then how is it measured?
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Why do bonds pay back the entire principal at maturity instead of paying it off gradually?

Bonds usually pay interest only and the entire principal is paid back at maturity. On the other hand fixed rate retail loans pay back both interest and principal such that at the end no debt is ...
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falling household savings

While reading Mazzucato's "The value of everything", I come across this The rise in private debt in the US and UK has resulted in household savings falling as a percentage of disposable income - ...
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Who owns state bonds?

Let's take as an example the province of Quebec in Canada with a debt of $273B. It just elected a conservative and nationalistic government to lead the next 4 years. Their platform is that of fiscal ...
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Syndicated Loans Terminology - Borrower & Sponsor

I am trying to understand what is the difference between the Borrower and the Sponsor entities in a syndicate loan agreement. Namely, it looks like quite often, the Borrower entity will be a Company ...
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How can countries be in so much debt?

You regularly hear in the media how countries are billions or even trillions of US dollars in debt. How does a country get so far in debt, and who is it in debt to? How can countries of the world ...
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When Does a Country's External Debt Become a Problem?

Here in the UK, the external debt is currently over 300% of GDP. To me this looks very worrying, using my basic financial logic, it seems like this debt will only go up (because of interest combined ...
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61 views

Explain some All countries excluding residents in BIS Debt Securities Data

In the BIS Debt Securities statistics: In both column "issueresidence" and column "issuenationality" there is a category called "All countries excluding residents". I do not understand what it means. ...
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Printing Money vs. Issuing International Bonds

I'm reading Niall Ferguson's The Ascent of Money and I had a question about the economic difference between printing money vs. selling bonds to foreign entities. At one point in the book, the author ...
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Contribution by each factor

Must admit it has been many years since I have done advanced calculations or anything remotely like it, so please bear with me. I have problem that I hope to get some help with. Say I have below ...
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Is Debt Monetization Equivalent to transferring money from rich to poor?

I'm reading Ray Dalio's "How the Economic Machine Works", and he says that there are four factors contributing to deleveragings in economies: 1) Debt Reduction 2) Austerity 3) Transferring wealth ...
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How do I calculate bad debt on revolving credit?

I'm not sure if this is the correct Stack Exchange site for this question but I think it makes the most sense to ask it here. I have a revolving credit system. A customer purchases and then has 6 ...
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Relation between growth rate of GDP and real interest rate for sustainable debt-to-GDP ratio

Why is the relation between the growth rate of GDP and the real interest rate important for sustaining the government the debt-to-GDP ratio ?
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Why, in such a debt-heavy era, is inflation still such a Bad Thing(TM)?

Going through the Wikipedia article on inflation, a number of pros and cons to inflation are covered. Most of the "cons" of inflation (cost-push inflation, hoarding, hyperinflation, diminished ...
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What is consumer debt and how could it make businesses vulnerable?

Consumer debt is the obligation to pay for the credit that the customers have used. But, how can tapping out more credits make business more vulnerable?
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Can a currency crisis be the proximate cause of a debt crisis?

I'm just curious whether there are any historical examples of a currency crisis in a country (speculative attacks leading causing a sudden devaluation of currency) leading directly to a debt crisis?
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Debt bearing capacity

In times of low yields and the prospect of rising yields, I asked myself if the european countries can ceteris-paribus cope with rising yields. Is there a way to calculate the effect of rising yields (...
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Why shouldn't governments use Forex reserve to pay their debts?

India has around 470 billion USD in debt and has around 400 billion USD in forex reserves. So why should India or any other nations shouldn't use their forex reserves to pay off their external debt ?
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Public Debt as Percent of GDP

My question relates to calculation total debt as percent of GDP (quarterly). Since debt is a stock and GDP is a flow, I can understand calculation it on an annual basis but not quarterly.
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Public debt and GDP in post-socialistic countries

Why is public debt in % of GDP in post-socialistic countries of Eastern Europe is less than in countries of Western Europe. Some arguments, opinions or articles?
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Do institutions buy debt with credit?

I am reading Money Power book, from 1932 (http://www.worldcat.org/title/money-power-and-human-life/oclc/3783026). The author explains how the War Loans in the UK worked. He says that the government ...
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«public-sector debt must now also include the central bank’s sharply rising debts». It didn't before?

In this text by Carmen Reinhardt, there's the following sentence: For Greece, Italy, Portugal, and Spain, public-sector debt must now also include the central bank’s sharply rising debts. What ...
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How have central banks been injecting currency after crises since 2007?

In an article by Jean-Michel Naulot about the 2007–2008 financial crisis, I read (my translation): Although central banks had an exemplary reaction at the time of the [2007–2008] crisis, they ...
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Does debt include interest owed? [closed]

If I calculate debt to gdp ratios, do I include the interest payment on the debt as part of the debt? Is debt defined as a recursive sequence? Does current debt= interest on debt + previous debt?
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Is there a statistic that shows which countries would be owed money if all external public debts were payed immediately?

The media loves to tout big debt figures whenever there is an economic crisis, but unless we know who owes money to who, it seems to me that these figures are useless since debt is all relative. I ...
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What does DOD stand for in this indicator?

I was looking at the indicator External debt stocks, total (DOD, current US$) on the worldbank website and I don't understand what DOD stands for.
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Purchase of the public debts by the ECB

In France, one of the presidential candidate said that the European Central Bank should purchase the public debts of the country and transform it into a perpetual debt (this is a literal translation, ...
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Limitation on what can be borrowed

Is there a framework for determining the limit of what can be borrowed? For example, lets say an institution with 1 trillion USD wanted to hold 5 trillion USD in government bonds, would there be a ...
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Economic effects of very large (>200%) household-debt-to-GDP-ratio in advanced economies

According to OECD figures, five OECD countries have houshold-debt-to-GDP ratios in excess of 200%: Denmark 292.0% Netherlands 277.1% Norway 221.8% Australia 211.8% Switzerland 211.2% Most of ...
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Is the American economy on the same path when it had a massive crash in 2007? Is there another bubble coming

I guess I should not be asking for technical answers, because I've learned economists are not to predict things like this. Yet from current data, and this article that reviewed said data: http://www....
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Proxy for debt service?

I'm trying to get info on debt service relative to GDP for Morocco. I know these sorts of figures exist for the US, Japan, etc., since a few authors use them, but Trading Economics does not seem to ...
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What would happen if China called in its debt?

I was talking with a friend of mine the other day about Trump putting the 35% tax on all overseas manufacturing. Couldn't this hurt those countries that have plants where US manufacturing comes from? ...
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Is it true that the eight richest men have more wealth than the bottom 50% of world population?

This statistic from Oxfam, an anti-poverty consortium, has been reported in prominent media outlets (example). Other articles dispute this statistic as misleading due to flimsy assumptions about debt (...
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Deficit: can be seen as a return?

Suppose I have a series of debt as % of GDP. By computing returns on this serie e.g. debt as % of GDP in year 1 is 50% in year 2 is 60% I compute $(60\%-50\%)/50\%$ can I interpret this measure as ...
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Is there a reliable estimate of what proportion of adults in a country are in debt at a given time?

Is there a reliable estimate of what proportion of adults in a given country are in debt at a given time? With "debt" covering student debt, debt secured by mortgages on property, credit card debt, ...