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A simple theory of exploding household debts

Kim, Minseong (2016): A simple theory of exploding household debts.

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Abstract

In this paper, I explore how a household budget constraint allows one to construct a simple theory of exploding household debts. The conclusion reached in this paper is that in case the household started off being indebted, maintaining balanced budget all the time is a very dangerous choice. For analysis, government is assumed to be non-existent.

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