出版社：Publishing House of the University of Economics in Katowice
摘要：As a result of subprime crisis,most major developed countries are at extraordinarily high debt levels. Some of them reached the level of public debt close to 100% of GDP. An additional problem is usually sustaining high level of budget deficit. Extreme imbalance of public budget can trigger the new crisis of the unprecedented scale. To solve the problem,governments could try to reduce debt-to-GDP ratios by holding debt constant and stimulating increase of GDP. However,it would require dramatic,socially and politically unacceptable austerity measures. The additional difficulty here is that GDP drops along with spending,so the economy as a whole shrinks and the debt-to-GDP ratio may not improve in that case. Eventually,austerity programs implemented so far have not brought the expected results. The alternative to austerity plans emergency exit could become "financial repression”. It relies on inflation,but it is a steady,stealthy process and therefore much more politically acceptable. By keeping interest rates low,governments receive cheap funding. On one hand,higher inflation will lead to faster nominal GDP growth and on the other,it will liquidate the size of the government debt burden by an amount equal to the negative real interest rate (impairing private savings at the same time). The paper presents the principle of "financial repression” and,on the basis of simulations,demonstrates its effectiveness.
