Debt forgiveness can promote sustainable growth from "summary" of House of Debt by Atif Mian,Amir Sufi
Debt forgiveness has the potential to create a virtuous cycle of sustainable growth. When households and businesses are burdened by high levels of debt, they are more likely to cut back on spending and investment, which can lead to a slowdown in economic activity. By forgiving debt, these entities are relieved of their financial obligations, freeing up resources that can be used to support consumption and investment. Moreover, debt forgiveness can help to reduce the risk of financial crises. When debt levels are high, even a small economic shock can trigger a wave of defaults that can destabilize the financial system. By forgiving debt, the risk of default is reduced, making the financial system more resilient to shocks and less prone to ...
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