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Public debt and the risk premium: A dangerous doom loop

Cinzia Alcidi and Daniel Gros, (2019), «Public debt and the risk premium: A dangerous doom loop», VoxEU, 23 Μαϊου

The relationship between high public debt and low interest rates is once again at the forefront of debate.This column shows that countries with high debt levels pay a risk premium. This creates the potential for self-reinforcing loops of high debt and high risk premia, which can become explosive.

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