Economic Integration and Government Revenue from Financial Repression

Posted: 13 Oct 2015

See all articles by Yothin Jinjarak

Yothin Jinjarak

Victoria University of Wellington - Te Herenga Waka - School of Economics & Finance

Abstract

We study a relationship between economic openness via financial and trade integration and government revenue from financial repression. An implicit budgetary saving, the financial repression revenue, as measured by the stock of government domestic debt multiplied by the difference between effective foreign and domestic interest rate, has declined significantly from the 1980s into the 2000s across the upper-income, the middle-income, and the low-income developing countries. While we find that both the financial and trade openness have a negative association with the financial repression revenue in the panel of countries, the effect of financial openness is stronger and the empirical correlations depend on the quality of governmental and budgetary management.

Keywords: Financial repression, Globalization, Government debt

JEL Classification: F36, H63, P11

Suggested Citation

Jinjarak, Yothin, Economic Integration and Government Revenue from Financial Repression. Economic Systems, Vol. 37, No. 2, 2013, Available at SSRN: https://ssrn.com/abstract=2673500

Yothin Jinjarak (Contact Author)

Victoria University of Wellington - Te Herenga Waka - School of Economics & Finance ( email )

P.O. Box 600
Wellington 6001
New Zealand

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