Debt forgiveness can stimulate economic recovery from "summary" of House of Debt by Atif Mian,Amir Sufi
Debt forgiveness can indeed be a powerful tool in jumpstarting economic recovery. When households are burdened with high levels of debt, they are more likely to cut back on their spending in order to meet their debt obligations. This reduction in consumption can lead to a decrease in overall economic activity, as businesses see a decline in demand for their goods and services. This can create a downward spiral, as businesses may be forced to lay off workers, leading to further reductions in household income and spending. By forgiving some of the debt held by households, it is possible to break this cycle and stimulate economic growth. When households have less debt to worry about, they are more likely to increase their spending, which can in turn boost dema...
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