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Article

Нерыночное размещение долга как финансовая репрессия

Under fiscal stress the government often turns to practice of financial repression to lower the debt service cost. Captive pension fund is one of the targets for enlarging the demand for public debt. We propose an extension of the overlapping generations model with the fully-funded pension system and fiscal policy to question the optimality of financial repression in the form of non-market placement of the public debt. Despite its negative impact on the capital accumulation, financial repression is used to finance public goods and can be an element of optimal tax policy of the benevolent government.