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Financial repression in general equilibrium: the case of the United States, 1948-1974
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Authors and Corporations: | , , , |
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Other Authors: | Kriwoluzky, Alexander 1978- [Author] • Müller, Gernot J. 1975- [Author] • Scheer, Alexander [Author] |
Type of Resource: | E-Book |
Language: | English |
published: | |
Series: |
Deutsches Institut für Wirtschaftsforschung: Discussion papers ; 2075
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Subjects: | |
Source: | Verbunddaten SWB Lizenzfreie Online-Ressourcen |
Summary: | Financial repression lowers the return on government debt and contributes, all else equal, towards its liquidation. However, its full effect on the debt-to-GDP ratio hinges on how repression impacts the economy at large because it alters investment and saving decisions. We develop and estimate a New Keynesian model with financial repression. Based on U.S. data for the period 1948-1974, we find, consistent with earlier work, that repression was pervasive but gradually phased out. A model-based counterfactual shows that GDP would have been 5 percent lower, and the debt-to-GDP ratio 20 percentage points higher, had repression not been phased out. |
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Physical Description: | 1 Online-Ressource (circa 54 Seiten); Illustrationen |