Last global financial crisis, as well as liquidity trap in Japan, the theory of debt deflation, the financial fragility hypothesis, the theory of balance sheet recession testifies imperfections of financial relations based on debt financing. It forces to reconsider principles of functioning of...

Debt can increase economic growth as it allows the households and firms to increase consumption and investment. However, high reliance on debt adversely affects economy as it can cause debt-deflationary recession, balance sheet recession, cyclical fluctuations in economy and decrease in...