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Credit Market Failures and Policy
Author(s) -
MINELLI ENRICO,
MODICA SALVATORE
Publication year - 2009
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/j.1467-9779.2009.01414.x
Subject(s) - subsidy , economics , investment (military) , microeconomics , market failure , monetary economics , interest rate , market economy , politics , political science , law
In a simplified version of the Stiglitz and Weiss (1981) model of the credit market we characterize optimal policies to correct market failures. Widely applied policies, notably interest‐rate subsidies and investment subsidies, are compared to the theoretical optimum.