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Thus, financial repression is most successful in liquidating debts when accompanied by inflation and can be considered a form of taxation, [6] or alternatively a form of debasement. [7] The size of the financial repression tax was computed for 24 emerging markets from 1974 to 1987. The results showed that financial repression exceeded 2% of GDP ...
Financial repression: Government policies such as interest-rate caps on government debt, financial regulations such as reserve requirements and capital controls, and barriers to entry in markets where the government owns or controls businesses.
[1] [2] In particular, he researched international trade and finance, economic development, monetary theory and policy; money and banking. [3] McKinnon is best known for developing the theory of "Financial repression" in 1973, working alongside his colleague Edward Shaw. [1] [4] [5]
Debt deflation is a theory that recessions and depressions are due to the overall level of debt rising in real value because of deflation, causing people to default on their consumer loans and mortgages. Bank assets fall because of the defaults and because the value of their collateral falls, leading to a surge in bank insolvencies, a reduction ...
In other words, raising the payroll tax by $1 as part of an austerity strategy would slow the economy more than would raising the income tax by $1, resulting in less net deficit reduction. In theory, it would stimulate the economy and reduce the deficit if the payroll tax were lowered and the income tax raised in equal amounts. [30]
Economic repression comprises various actions to restrain certain economical activities or social groups involved in economic activities. It contrasts with economic liberalization . Economists note widespread economic repression in developing countries .
In Krugman's words, "financial economists believe we should put capital development of the nation in the hands of what Keynes had called a 'casino'". [6] However, there may be insufficient evidence for Krugman to overturn the efficient market hypothesis and Krugman's insights do not differ much from typical Keynesian ideas where the irrational ...
Third, financial transactions conducted by the kleptocrat in a Western country complete the integration of the funds. Once a kleptocrat has purchased an asset this can then be resold, providing a defensible albeit illegal origin of the funds.