On the Optimality of Financial Repression

• 成果类型: Article
• 署名作者: Chari, V. V.; Dovis, Alessandro; Kehoe, Patrick J.
• 署名单位: University of Minnesota System; University of Minnesota Twin Cities; Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; University of Pennsylvania; Stanford University; University of London; University College London
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/704575
• 发表日期: 2020
• 页码: 710-739
• 关键词: sovereign debt; AGENCY COSTS; net worth; RISK; GLOBALIZATION; fluctuations; INVESTMENT; inflation; default

摘要

When is financial repression-namely, policies that force banks to hold government debt-optimal? With commitment, such policies are never optimal because they crowd out banks' productive investments. Without commitment, they are optimal when governments need to issue unusually large amounts of debt, such as during wartime. In such times, repression allows governments to credibly issue more debt. Repression increases credibility because when banks hold government debt, defaults dilute net worth, reduce investment, and are thus costly ex post. Forcing banks to hold debt endogenously increases these ex post costs but has ex ante costs because doing so crowds out investments.