Financial repression and fiscal policy

KL Gupta, R Lensink

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2 Citations (Scopus)


This paper develops a simulation model to assess the consequences of government's trying to raise revenues through financial repression in developing countries. The measures of financial repression studied are (1) government borrowing from the banking sector to finance its budget deficit (2) government borrowing from the banks at lower rates and (3) the government levying a tax on interest income from government bonds. The policies appear to be detrimental to private capital formation, while the effect on government expenditures is repression-measure specific. (C) 1997 Society for Policy Modeling. Published by Elsevier Science Inc.

Original languageEnglish
Pages (from-to)351-373
Number of pages23
JournalJournal of Policy Modeling
Issue number4
Publication statusPublished - Aug-1997


  • financial repression
  • simulation model
  • developing countries

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