Working Paper: CEPR ID: DP489
Authors: Alberto Giovannini; Martha de Melo
Abstract: This paper analyses, from a public-finance perspective, the theoretical underpinnings and the empirical relevance of the phenomenon of financial repression. The analysis explicitly accounts for the interaction between capital controls and financial repression. The proposed empirical estimate of the revenue from financial repression is based on the difference between the domestic and the foreign cost of borrowing of the government. The correlations of the revenue from financial repression with inflation, exchange rates and per-capita income are discussed.
Keywords: financial repression; capital controls; international capital flows; taxation; government revenue; inflation; developing countries
JEL Codes: 112; 322; 431
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| inflation (E31) | revenue from financial repression (G18) |
| financial repression (G28) | revenue from financial repression (G18) |
| inflation (E31) | cost of domestic borrowing (H74) |
| policy changes (J18) | government budget impacts (H69) |