Финансовая репрессия и популизм

Abstract

Due to its implicit nature, financial repression is a convenient fiscal policy measure for the populist government. Financial repression gives the populist government the opportunity to finance more government spending with less explicit taxes. The optimal parameters of financial repression in the form of nonmarket debt placement are determined for the populist government. Populism is introduced by the choice of government spending and tax on capital higher and lower respectively than those chosen through voting procedure. The overlapping generations model with a fully funded pension system and financial repression is used to determine the optimal fiscal policy of the populist government. Moreover, the influence of the two fiscal regimes on household welfare is considered. It is shown that financial repression in the form of nonmarket debt placement is an element of the optimal fiscal policy for the populist government. Such government will set the gross interest rate on government bonds lower than the gross interest on capital by placing its debt in the captive pension fund. This leads to the fall in the pension fund’s yield and to the decrease in household wealth. The optimal repressed interest rate on government bonds is higher the bigger the population growth rate is, the less the government is addicted to populism and the lower is the elasticity of substitution between consumption and government spending. We also show that the financial repression regime under populism is associated with higher welfare compared to the voting regime without populism. This result is the consequence of the fact that the populist policy allows the reduction of the distorting capital tax rate and its replacement by lump-sum financial repression.