Financial Repression Effect on Economic Growth: An Empirical Analysis
<b>Subject </b>The article <b></b>considers the influence of financial repression index (FRI) on economic growth of OECD and BRICS nations through econometric models. <br></br> <b>Objectives</b> The purpose of this study is to build a linear model to establish the impact of FRI on GDP growth rate and examine the effect of the index on economic growth components such as consumption, investment and government spending. <br></br> <b>Methods</b> At the core of the research lies regression analysis of linear economic growth model. To analyze the panel of data, various static estimating model are used. <br></br> <b>Results</b> I have built a linear growth model and included the FRI as one of the variables. The estimators used fail to identify a significant impact of FRI on the dependent variable. Second, I construct linear models with GDP components as functions and analyze the effect of FRI on the dynamics of those. As a result, I obtain positive indications of FRI affecting negatively in the medium term the dynamics of consumption, the main driver of growth in the developed world. <br></br> <b>Conclusions and Relevance</b> The effect of financial repression in short and medium terms cannot necessarily be identified through GDP rate dynamics, but could be captured through the evolution of consumption. This opens a new perspective on the study of financial repression policies and its detrimental effect beyond banking and investment spheres.