Finanzielle Repression

ein Instrument zur Bewältigung der Krisenfolgen?

authored by: Stefan Homburg, Bernhard Herz, Alexander Erler, Thomas Mayer, Arne Heise, Ulrike Neyer
Abstract: Financial repression committed by central banks has been put forward as a means to secretly reduce the real burden of high public debts. Financial repression has allegedly played an important role in the impressive reduction of the US debt ratio after World War II. A mix of conventional budget consolidation and rapid growth was the main driver in this relative debt reduction with a minor role for financial repression. But does financial repression really exist? The authors express different opinions on evidence for this concept. Those authors who find that there are indicators of financial repression fear redistributive tendencies between debtors and creditors and high opportunity costs in the form of savings and investment distortions. Therefore, financial repression is not a "cure" for the high public debts amassed in the euro area during the recent sovereign debt and banking crisis. Furthermore, the high sovereign debts in the euro area may threaten economic development and impose high costs on society. Therefore, reducing these debts is politically highly relevant, and fiscal policy should be characterised by a modest reduction in government spending and/or tax increases, combined with a policy promoting economic growth. Macroprudential regulations should supplement this financial policy.
Organisation(s): Institute of Public Finance
External Organisation(s): University of Bayreuth
Goethe University Frankfurt
Universität Hamburg
Heinrich-Heine-Universität Düsseldorf
Type: Article
Journal: Wirtschaftsdienst
Volume: 93
Pages: 731-750
No. of pages: 20
ISSN: 0043-6275
Publication date: 13.11.2013
Publication status: Published
Peer reviewed: Yes
ASJC Scopus subject areas: Business, Management and Accounting (miscellaneous)
Sustainable Development Goals: SDG 8 - Decent Work and Economic Growth
Electronic version(s): https://doi.org/10.1007/s10273-013-1593-2 (Access: Closed)
http://hdl.handle.net/10419/126432 (Access: Open)