Longer debt maturity reduces fiscal crisis impact, boosts welfare.
The study explores how the length of time a country takes to pay back its debts affects its financial stability during a crisis. Longer debt maturities can help reduce the amount of debt that increases during a crisis, leading to less need for high taxes or spending cuts later on. This can ultimately improve the overall well-being of the country. The researchers found that the best way for a country to respond to a crisis depends on how long it takes to pay back its debts.