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Financial Repression and Laffer Curves

Kanat Isakov () and Sergey Pekarski
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Kanat Isakov: National Research University Higher School of Economics

HSE Working papers from National Research University Higher School of Economics

Abstract: This paper uses a simple calibrated general equilibrium model to evaluate the revenue from financial repression and its impact on Laffer curves for consumption, capital and labor taxes. By imposing a requirement for households to hold public debt with a below-market rate of return the government distorts optimal household allocation and raises extra revenues. Tighter financial repression shifts Laffer curves for labor and consumption down, but increases revenue from capital income taxation. Total budget revenue increases, which allow financing more public goods and can be welfare-improving

Keywords: financial repression; tax distortions; Laffer curve. (search for similar items in EconPapers)
JEL-codes: E62 G28 H21 H24 H31 H63 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2015
New Economics Papers: this item is included in nep-dge, nep-mac, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in WP BRP Series: Economics / EC, November 2015, pages 1-10

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Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:113/ec/2015

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