The Quantitative and Qualitative Analysis of the Budget Cost of the Czech Supporting and Guarantee Agricultural and Forestry Fund

Karel Janda

No 86, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: The paper analyzes the government budget cost of credit guarantees and subsidies. The analysis is done both in a general qualitative manner and quantitatively for the case of Czech Supporting and Guarantee Agricultural and Forestry Fund (SGAFF). In the quantitative part of the paper we show that the portfolio of the SGAFF has a sufficient value to cover expected costs of credit guarantees and subsidies provided by the SGAFF. The qualitative theoretical model is dealing with government interventions designed to decrease the credit rationing of good farmers. The theoretical model shows that with uniform non-targeted supports the budget cost minimizing government unambiguously prefers lump-sum guarantees to interest rate subsidies. With supports targeted fully to disadvantaged farmers the government is indifferent between lump-sum guarantees, proportional guarantees and interest rates subsidies as far as the government budget costs are concerned.

Keywords: Transition; Credit; Subsidies; Guarantees (search for similar items in EconPapers)
JEL-codes: D82 G28 P31 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2005, Revised 2005
New Economics Papers: this item is included in nep-agr, nep-env and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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