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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Do countries with high taxes end up with low government debt but high private debt?

I'm curious if my observation that some Scandinavian countries (Denmark, Sweden) have high taxes, low government debt, but high private (in particular high household) debt is applicable more generally ...
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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 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, ...
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Is a high borrowing rate bad?

I'm not an economist, so this may be a stupid question, but why are high borrowing rates among individuals and corporations bad? Like, I've heard high student and credit card debt mentioned as reasons ...
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Useful models/theory private debt and borrowed constrained households

In macro oriented research papers the role of private debt is discussed and that apparently when there is a lot of private debt in the economy, households tend to be borrowed constrained.. Could ...
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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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89 views

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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26 views

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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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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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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38 views

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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What is the FRB's Z.1 table L.218

I'm updating a document that cites this: As of December 2011, 67 percent of home mortgage debt was either securitized through agency or non-agency MBS or held on the balance sheets of Fannie ...
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106 views

Why might a country with a budget surplus continue issuing bonds - ie borrowing?

Some argue that if a government runs a budgetary deficit, it is a drag on the public finances because taxpayers must fund interest payments to external creditors. If the interest payments were an ...
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29 views

Biggest foreign owners of China debt?

It is already known that China and Japan are the biggest owners of US debt - about one trillion dollars each. But who are the biggest owners of China debt? I mean the foreign owners.
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47 views

Does China issue treasury bonds too?

The USA is issuing a lot of treasury bonds and investors are buying it. But does China issue such bonds too? If yes, then how many such bonds did they issued and who are the largest owners of those ...
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32 views

Why does the Loanable Funds Market model use the real interest rate instead of the nominal interest rate?

As far as I understand, the majority of loan contracts specify a nominal interest rate, NOT a real interest rate. So a hypothetical loanable funds markets would have people suggesting potential ...
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Why would non-investment grade debt be issued at the investment-grade debt market?

Newsweek quoted Bentley University Prof. David Gulley Ph.D., Univ of Kentucky-Lexington, 1990 M.A., University of Kentucky, 1989 B.A., Alma College, 1986 A \$10 Trillion Corporate Debt Bomb Is ...
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47 views

How can increasing debt boost potential returns?

May 26 2020. Why Even Carl Icahn Couldn't Save Hertz From Chapter 11 - Bloomberg Hertz’s debt binge began when it was acquired by private equity firms from Ford Motor Co. in 2005; the new owners ...
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Do states compete with each other when they emit debt?

Let's say that, for some reason (a crisis or similar), many first-world countries' states need to emit public debt to be able to pay the services the normally provide (pensions, health etc.). As I ...
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How can government mitigate the long-term effects of current shut downs?

I’m not well versed in economics by any stretch of the imagination. But I am confused with certain measures taken thus far by the government. There is currently a temporary shutdown of vast sectors ...
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26 views

What happens if you cannot lend more than what you have?

This is hypothetical but what would happen if you cannot lend more money than you have? Say you have £100, the maximum you can lend is £100. But somehow you lend £200 to Joe, and Joe spends all of it ...
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Spending despite fiscal deficit

This is going to be a rather simple question. Surprisingly, I did not find quite a lot of answers satisfactorily explaining my point. The question goes like this- The USA, under the Trump regime, ...
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568 views

Currency Devaluation - As a Means of Paying Off Debt

From https://www.sapling.com/8117368/debt-handled-currency-devaluation: Currency devaluation will not only affect consumer debts, but it will affect how a country pays back its national debt. If a ...
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Why don't we have many-to-many lending yet?

Trying to research this for some time, but can't really find anything relevant. As it currently stands borrowing can be one-to-one: 1 customer borrows money from 1 bank. And can be one-to-many: 1 ...
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242 views

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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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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Project Financing Evaluation and accounting

While evaluating the whole entrerprise value of Falck Renewables using the discounted cash flow method I end up with a negative continuing value and economic profit due to the negative spread between ...
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Does Medicaid or Medicare represent a higher risk to the Federal Government Solvency and Debt going forward?

I'm trying to understand not only which program is expected to be larger in terms of costs, but which one has the least capacity to adjust (reduce benefits if revenues for the program fall).
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Shouldn't the total global debt amount to zero and not $253 trillion?

In Jan 2020, the Institute of International Finance (IIF) came out with a report (read summary here) that the total global debt is expected to climb to a new all-time high of more than $257 trillion ...
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117 views

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 reconcile fact that “real interest=nominal interest - inflation” with prediction of the interest rate theory about expensivity of loans?

According to the interest rate theory higher price level will lead to following chain of events in the short run: Marginal propensity to save will decrease(ratio of spending/saving will change, people ...