From Financial Repression to External Distress: The Case of Venezuela

Carmen Reinhart and Miguel Santos ()

Emerging Markets Finance and Trade, 2016, vol. 52, issue 2, 255-284

Abstract: Recent work suggests a connection between domestic debt and external default. We examine potential linkages for Venezuela, where the evidence reveals a nexus among domestic debt, financial repression, and external vulnerability. The financial repression tax (as a share of GDP) is similar to OECD economies, in spite of higher debt ratios in the latter. The financial repression “tax rate” is higher in years of exchange controls and legislated interest rate ceilings. We document a link between domestic disequilibrium and a weakening of the net foreign asset position via private capital flight. We suggest these findings are not unique to Venezuela.

Date: 2016
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Related works:
Working Paper: From Financial Repression to External Distress: The Case of Venezuela (2015)
Working Paper: From Financial Repression to External Distress: The Case of Venezuela (2015)
Working Paper: From Financial Repression to External Distress: The Case of Venezuela (2015)
Working Paper: From Financial Repression to External Distress: The Case of Venezuela (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:52:y:2016:i:2:p:255-284

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DOI: 10.1080/1540496X.2015.1105614

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