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Financial repression in general equilibrium: the case of the United States, 1948-1974

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Bibliographic Details
Authors and Corporations: Kliem, Martin (Author), Kriwoluzky, Alexander (Author), Müller, Gernot J. (Author), Scheer, Alexander (Author)
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
Subjects:
Source: Verbunddaten SWB
Lizenzfreie Online-Ressourcen
Description
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.
Physical Description: 1 Online-Ressource (circa 54 Seiten); Illustrationen