Debt crises have longlasting effects on economies from "summary" of House of Debt by Atif Mian,Amir Sufi
Debt crises can have enduring consequences for economies, shaping their trajectory for years to come. The aftermath of a debt crisis is not simply a temporary setback that can be quickly overcome. Rather, the effects of a debt crisis tend to linger and permeate various aspects of an economy, influencing its performance and prospects in significant ways. One of the key ways in which debt crises leave a lasting impact is through the erosion of confidence and trust in the financial system. When a debt crisis hits, investors and consumers alike become wary and hesitant, reluctant to engage in financial transactions and investments. This lack of confidence can persist long after the initial crisis has passed, impeding the recovery and growth of the economy. Moreover, debt crises can lead to a prolonged period of economic instability and uncertainty. The disruptions caused by a debt crisis can create a ripple effect throughout the economy, impacting businesses, households, ...
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