Interest-bearing loans and unpayable debts in slow-growing economies : Insights from ten historical cases
Hartley, Tilman (Universitat Autònoma de Barcelona. Institut de Ciència i Tecnologia Ambientals)
Kallis, Giorgos (Universitat Autònoma de Barcelona. Institut de Ciència i Tecnologia Ambientals)

Date:	2021
Abstract:	Under what circumstances are interest-bearing loans compatible with an economy without much growth? The question is becoming increasingly important given a tendency towards declining growth in industrialised economies and increasing evidence that continued growth is incompatible with environmental sustainability. Previous theoretical work suggests that when interest-bearing loans compound, this results in exponentially growing debts that are impossible to repay in the absence of economic growth. We here examine ten historical cases to assess support for this finding. We find that interest-bearing loans have typically resulted in unpayable debts in these non- and slow-growing economies. We further identify four broad category of measures to prevent or alleviate the problem of unpayable debts, and show how they have been employed in the past. Our Appendix compiles sources of debt regulation from across the world over five millennia.
Grants:	European Commission 882314 Ministerio de Economía y Competitividad CEX2019-000940-M
Note:	Unidad de excelencia María de Maeztu CEX2019-000940-M
Note:	Altres ajuts: acords transformatius de la UAB
Rights:	Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, la comunicació pública de l'obra i la creació d'obres derivades, fins i tot amb finalitats comercials, sempre i quan es reconegui l'autoria de l'obra original.
Language:	Anglès
Document:	Article ; recerca ; Versió publicada
Subject:	Interest ; Debt ; Stationary economy ; Steady-state economy ; Environmental sustainability
Published in:	Ecological economics, Vol. 188 (October 2021) , art. 107132, ISSN 0921-8009

DOI: 10.1016/j.ecolecon.2021.107132

12 p, 659.4 KB

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Research literature > UAB research groups literature > Research Centres and Groups (research output) > Experimental sciences > Institut de Ciència i Tecnologia Ambientals (ICTA)
Articles > Research articles
Articles > Published articles