Countries that build up high levels of debt suffer longer and deeper recessions than low-debt countries according to a new study released by the American Institute for Economic Research (AIER). AIER research fellow Polina Vlasenko’s analysis looked at all kinds of debt (sovereign debt, business debt, or household debt) and found that those countries with the highest total debt-to-GDP levels (Japan and many European Union countries) suffered greater GDP declines than countries with lower rations (Canada and the United States). Vlasenko explains:
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