China maintains tight controls over its capital account. Its current policy regime also features financial repression, under which banks are required to extend funds state-owned enterprises (SOEs) at favorable terms, despite their lower average productivity than private firms. We incorporate these into a general equilibrium model. Our model illustrates tradeoff between aggregate and inter-tempo...

China has been experiencing financial repression for a long time. The main feature of this repression is a regulated interest rate system. This results in private firms’ low likelihood of getting money from the official banking system, and at the same time seeded the emergence of the shadow banks, which introduces uncontrollable risks into the Chinese economy. Also, other policy goals, such as ...

Financial liberalization has been a controversial issue, as empirical evidence for growth enhancing effects is mixed. Here, we find sizable welfare gains from liberalization (cost to repression), though the gain in economic growth is ambiguous. We take the view that financial liberalization is a government policy that alters the path of financial deepening, while financial deepening is endogeno...

In this paper we consider a triangular inter-dependence between hyperinflation, financial repression, and the crisis in FRY 1990s. When all three vertices of triangle are present, propagates is amplified along its edges. We focus, especially, on less studied link repression FRY. Setting administrative limits interest rates under conditions hyperinflation leads to deeply negative real rates. The...