The article explores how the amount of government debt held by its own citizens affects the risk of the government defaulting on its loans. By creating a model that considers both domestic and foreign debt, the study shows that having a lot of domestic debt can make it harder for investors to recover their losses if the government defaults, leading to a decrease in credit and economic output. The researchers used data from Argentina to validate their model and found that government intervention is needed to balance the types of debt for optimal efficiency. Pigouvian subsidies, which are government incentives, can help improve the situation.