Retrieving "Fiscal Fragility" from the archives

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1. Risk Premiums

   Linked via "fiscal fragility"

   Risk Premiums and Fiscal Policy
   In macroeconomic contexts, particularly concerning sovereign debt, risk premiums directly impact the cost of borrowing. As noted in discussions regarding Public Debt, the relationship between the real interest rate ($r$) and the economic growth rate ($g$), often expressed as $r - g$, dictates the sustainability of debt servicing. When sovereign risk premiums inflate due to perceived…