Financial repression delivers stopgap funding without inflation risk – paper
NBER paper argues recent macro-prudential mandates are effectively forms of repression
Financial repression can provide governments with stopgap funding without necessarily undermining central banks’ inflation objectives, according to a new paper published by the US National Bureau of Economic Research.
Authors Roberto Gómez-Cram, Hanno Lustig, Howard Kung and David Zeke analyse the impact of financial repression – policies that create “captive demand” for government bonds – on borrowing costs. They explore two different monetary policy scenarios by modelling an economy with both
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