Universiteit Leiden

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Lecture | L-PEG Lunch Research Seminar

The Microfoundations of Debt Crises

Friday 25 September 2020
Online event - Kaltura (link sent to registered participants)


Growing sovereign debt burdens and debt crises have dire consequences for national economies and global markets. Yet, governments consistently fail to restrain debt even though excessive debt burdens historically predict debt crises. Why? This study aims to improve our under- standing of individual level preferences towards debt reduction, and inter-temporal policies more broadly. We draw on the deep macro-level literature on debt accumulation, stabilization, crises, and inter-temporal policy preferences to develop a range of testable hypotheses regarding individual level preferences toward debt reduction. Our analysis focuses on both the distributional and temporal elements of debt policy and their underlying mechanisms. We designed a conjoint experimental survey instrument that varies the distributional and procedural elements of hypothetical debt reduction proposals. We present the results from a pilot sample drawn from an MTurk sample. We find that distributive concerns appear larger than temporal discounting though these effects are conditional across several variables. We also find evidence that support for debt reduction depends on partisan cues and age. We plan to extend our conjoint design to a larger, more representative sample in the near future.

Registration: Please register in advance at l-peg@hum.leidenuniv.nl to receive a copy of the paper

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