Is financial repression a solution to reduce fiscal vulnerability? The example of France since the end of World War II

Marcel Aloy, Gilles Dufrénot () and Anne Péguin-Feissolle
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Anne Péguin-Feissolle: GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

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Abstract: This article contributes to the recent empirical literature on financial repression and focuses on the French case since the end of World War II. We find that the fiscal adjustment needed to lower the debt ratio has been smaller during the years of financial repression in comparison with those of liberalized financial markets. This was possible because the real interest rates were low. We conduct a counterfactual analysis to see whether the vulnerability of public finances would have been different, if, since the late 1980s, the governments had continued carrying out the same financial repression policies. We answer affirmatively showing that the cost of debt service would have been reduced.

Keywords: Economie; quantitative (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (7)

Published in Applied Economics, 2014, 46 (6), pp.629--637. ⟨10.1080/00036846.2013.861586⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01463920

DOI: 10.1080/00036846.2013.861586

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