REFLECTIONS ON THE CONSEQUENCES AND RISKS OF AN ECONOMY’S INDEBTEDNESS

Camelia Milea

Studii Financiare (Financial Studies), 2021, vol. 25, issue 2, 50-63

Abstract: The paper aims to present some risks and consequences of the indebtedness of an economy. The article is based on the results of a research project1 and it describes the negative effects of a high level of indebtedness of an economy, the elements that influence the risks of an economy’s indebtedness, some aspects of debt sustainability, the factors influencing the risk of default of public debt, as well as the negative consequences of non-repayment of sovereign debt. The conclusions of the article show that the effects of loans on the debtor economy depend on how they are used; also, the risks of a country's (sovereign) indebtedness depend primarily on country-specific risks and affect debt sustainability. After highlighting the multiple negative effects of a high level of debt, we emphasize the importance of ensuring debt sustainability

Keywords: loans; effects; default risk; debt sustainability (search for similar items in EconPapers)
JEL-codes: F34 H63 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:vls:finstu:v:25:y:2021:i:2:p:50-63

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