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But finance ministers are still at odds over the effect of debt reduction on economic growth.
If it were to fall into severe financial trouble, it might trigger a Lehman Brothers-style event, creating a domino effect of debt similar to the banking crisis of 2008.
So does the sovereign-debt crisis: banks are paying over the odds to borrow in wholesale markets because of worries about the effect of debt restructuring and Italy's own creditworthiness.
That could change, of course, but it is worth pointing out that based on the analysis in the much-cited Alberto Alesina paper connecting austerity and growth, one of the key causal relationships is the effect of debt reduction on high interest rates.
As CreditRepair notes, the trickle-down effect of debt can affect your parenting style, as well as the overall happiness of your family.
In order to identify the effect of debt substitution on tax exhaustion and profitability, Mackie Mason (1990) proposes considering not only non-debt tax shields but also the probability of bankruptcy.
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It is much easier to renege on the latter than to default on the former: Wall Streeters have probably assumed that some of that $4 trillion gap in Social Security will not be filled in any case.Second, it is hard to be sure about the effect of debt-financed reform on national saving.
This effect is similar to the results of our benchmark test model, which further supports hypothesis 2. In Table 4, for dyadic-level control variables, the effect of debt-to-asset ratio networks on interlocking networks does not support the prediction of supervision and control theory.
He says the effects of debt cancellation have been submerged by corruption and inequality.
This is the reality, however hard parents try and insulate their children from the effects of debt.
Other explanations that point to the effects of debt dilution and the possibility of IMF triggered debt runs, however, are also possible.
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