Details
| Translated title of the contribution | Financial repression-Useful to manage the consequences of the financial crisis? |
|---|---|
| Original language | German |
| Pages (from-to) | 731-750 |
| Number of pages | 20 |
| Journal | Wirtschaftsdienst |
| Volume | 93 |
| Issue number | 11 |
| Publication status | Published - 13 Nov 2013 |
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.
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- Business, Management and Accounting (miscellaneous)
Sustainable Development Goals
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In: Wirtschaftsdienst, Vol. 93, No. 11, 13.11.2013, p. 731-750.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Finanzielle Repression
T2 - ein Instrument zur Bewältigung der Krisenfolgen?
AU - Homburg, Stefan
AU - Herz, Bernhard
AU - Erler, Alexander
AU - Mayer, Thomas
AU - Heise, Arne
AU - Neyer, Ulrike
PY - 2013/11/13
Y1 - 2013/11/13
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=84888255489&partnerID=8YFLogxK
U2 - 10.1007/s10273-013-1593-2
DO - 10.1007/s10273-013-1593-2
M3 - Artikel
AN - SCOPUS:84888255489
VL - 93
SP - 731
EP - 750
JO - Wirtschaftsdienst
JF - Wirtschaftsdienst
SN - 0043-6275
IS - 11
ER -