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Nonmarket Debt Placement As Financial Repression

Author

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  • Norkina, O.

    (National Research University Higher School of Economics, Moscow, Russia)

  • Pekarski, S.

    (National Research University Higher School of Economics, Moscow, Russia)

Abstract

Under fiscal stress the government often turns to practice of financial repression to lower the debt service cost. Captive pension fund is one of the targets for enlarging the demand for public debt. We propose an extension of the overlapping generations model with the fully-funded pension system and fiscal policy to question the optimality of financial repression in the form of non-market placement of the public debt. Despite its negative impact on the capital accumulation, financial repression is used to finance public goods and can be an element of optimal tax policy of the benevolent government.

Suggested Citation

  • Norkina, O. & Pekarski, S., 2015. "Nonmarket Debt Placement As Financial Repression," Journal of the New Economic Association, New Economic Association, vol. 28(4), pages 31-55.
    • Handle: RePEc:nea:journl:y:2015:i:28:p:31-55
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    References listed on IDEAS

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    Cited by:

    1. Mamedly, M. & Norkina, O., 2019. "Optimal Financial Repression in an Overlapping Generations Model with Endogenous Labor," Journal of the New Economic Association, New Economic Association, vol. 43(3), pages 34-56.
    2. Mariia A. Elkina, 2021. "Financial Repression And Transmission Of Macroeconomic Shocks In A DSGE Model With Financial Frictions," HSE Working papers WP BRP 246/EC/2021, National Research University Higher School of Economics.
    3. Maria Elkina, 2021. "Financial Repression and Financial Sector Efficiency in a General Equilibrium Model [Финансовая Репрессия И Эффективность Финансового Рынка В Модели Общего Равновесия]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 44-81, June.

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    More about this item

    Keywords

    financial repression; fully-funded pension system; overlapping generations; optimal taxation; government debt;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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