Japanese Sovereign Debt

The graph is from this paper by Takeo Hoshi & Takatoshi Ito (Jan. 2014). A draft is here (Mar. 2013). 
The authors say that even-though the debt to GDP ratio in Japan is the highest in the world, interest rates have been low. What explains that? They say that a possible explanation is that a large portion of the debt is owned by Japanese who basically feel confortable with low yields. That however is unsustainable and corrective measures are necessary. 
The authors argue in the conclusions:

The Japanese government debt is clearly unsustainable without a drastic change in fiscal policy. The interest rates of Japanese government bonds, however, have been low. Market participants do not seem to worry about the problem of high and rising debts. The continuing low JGB yields may reflect the market’s view that the ample amount of private sector financial assets in Japan will always be there to absorb additional JGBs, but the current calm situation may not continue. The rapid aging of the Japanese population means that the growth of private sector savings is slowing down and eventually will turn negative. The Japanese government cannot rely on the private sector to continue buying JGBs beyond a certain point. (p. 19).  

Debt and social interactions

Two sentences from this paper (Georgarakos, Haliassos, and Pasini, January 2013): 

We find that the higher the perceived income of the social circle, the greater the tendency of respondents to have outstanding loans and in sizeable amounts . . . The effect is stronger for those who see themselves as having lower income than their social circle. P. 23-24. 

How Costly are Debt Crises?

From a new paper by Furceri and  Zdzienicka 

The aim of this paper is to assess the short- and medium-term impact of debt crises on GDP. Using an unbalanced panel of 154 countries from 1970 to 2008, . . . the paper shows that debt crises produce significant and long-lasting output losses, reducing output by about 10 percent after eight years. The results also suggest that debt crises tend to be more detrimental than banking and currency crises. 

Debt: Three regions of the world

This explains partially why the world economy is turning around in terms of economic performance. Excessive debt by government in the developed world vs governments in the developing word. Remember that the 1980s was the lost decade for many countries in Latin America and Africa. It was due to excessive debt and the increase in the prices of oil. Alas, a lost decade is on its way for developed economies. Source (HT: Paul Krugman).