6533b7d7fe1ef96bd1269122
RESEARCH PRODUCT
Credit market failures and policy
Enrico MinelliSalvatore Modicasubject
MacroeconomicsEconomics and EconometricsSociology and Political ScienceCredit market imperfections Optimal con- tracts Development economics.Subsidycredit market imperfections optimal contracts development economicsInvestment (macroeconomics)Regional policyMicroeconomicsEconomicsBond marketFinanceSimple (philosophy)Market failuredescription
In a simple model of the credit market, based on Stiglitz-Weiss (1981), equilibria are computed and optimal policies to correct market failures are characterized. Some widely applied policies, notably interest-rate subsidies and investment subsidies, are compared to theoretical optimum, and an alternative optimal policy is described which we argue is more robust to model misspecification. An insight on the trade-off between credit policy and infrastructural investment is also offered. A discussion of some aspects of regional policy in Italy's Mezzogiorno is finally presented as an application of the analysis.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2009-06-01 |