01889cas a2200253 a 4500 AALejournalIMF014948 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484369234 1018-5941 BD-DhAAL BD-DhAAL Reinhart, Carmen. The Liquidation of Government Debt / Carmen Reinhart, M. Belen Sbrancia. Washington, D.C. : International Monetary Fund, 2015. 1 online resource (47 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students High public debt often produces the drama of default and restructuring. But debt is also reduced through financial repression, a tax on bondholders and savers via negative or belowmarket real interest rates. After WWII, capital controls and regulatory restrictions created a captive audience for government debt, limiting tax-base erosion. Financial repression is most successful in liquidating debt when accompanied by inflation. For the advanced economies, real interest rates were negative 1\2 of the time during 1945-1980. Average annual interest expense savings for a 12-country sample range from about 1 to 5 percent of GDP for the full 1945-1980 period. We suggest that, once again, financial repression may be part of the toolkit deployed to cope with the most recent surge in public debt in advanced economies. Mode of access: Internet Sbrancia, M. Belen. IMF Working Papers; Working Paper ; No. 2015/007 Full text available on IMF http://elibrary.imf.org/view/journals/001/2015/007/001.2015.issue-007-en.xml IMF e-Library