Credit Subsidies

Pedro Teles and Fiorella De Fiore
Authors registered in the RePEc Author Service: Oreste Tristani

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: Credit subsidies are an alternative to interest rate and credit policies when dealing with high and volatile credit spreads. In a model where credit spreads move in response to shocks to the net worth of financial intermediaries, credit subsidies are able to stabilize those spreads avoiding the transmission to the real economy. Interest rate policy can be a substitute for credit subsidies but is limited by the zero bound constraint. Credit subsidies overcome this constraint. They are superior to a policy of credit easing as long as the government is less efficient than financial intermediaries in providing credit.

JEL-codes: E31 E40 E44 E52 E58 E62 E63 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
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https://www.bportugal.pt/sites/default/files/anexos/papers/wp201827_0.pdf

Related works:
Journal Article: Credit subsidies (2021)
Working Paper: Credit subsidies (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:w201827

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