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What is a haircut on debt

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Why do governments choose to borrow (that is, float debt) rather than raise tax revenues? What does it mean for a government to default on its debt and what implications do you think this has on their ability to raise tax revenues and to continue borrowing?

What is a "haircut" on debt and why would lenders ever give borrowers a "haircut"?

Reference no: EM133079482

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