DP489 Government Revenue from Financial Repression

Author(s): Alberto Giovannini
Publication Date: January 1991
Keyword(s): Capital Controls, Developing Countries, Financial Repression, International Capital Flows, Taxation
JEL(s): 112, 322, 431
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=489

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.