Economy-Wide Effects of Improving Small Firms Access to Capital Markets: An Applied General Equilibrium Assessment

Omar Chisari, Carlos Romero and Juan Pablo Vila Martínez ()
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Juan Pablo Vila Martínez: Departamento de Economía y Finanzas UADE

Revista de Analisis Economico – Economic Analysis Review, 2016, vol. 31, issue 1, 15-36

Abstract: Is it possible to increase GDP, reduce unemployment and improve income distribution by giving small firms better access to capital markets? This paper argues that an answer to that question could be affirmative. However, it also shows that self-exclusion of small firms from programs of access to capital markets conditional on higher formalization is a plausible scenario. Formalization could be expensive for them in terms of higher effective taxes and costs of compliance with norms and standards. The paper gives also estimates of the required gains in productivity that could induce firms to become more formal and access the capital markets at a lower cost of capital. To address those issues we use a general equilibrium approach for the Argentine economy to have the economy wide impacts and costs, i.e. including the effect on other sectors of the reallocation of resources to small firms.

Keywords: Small business; applied general equilibrium; access to capital markets (search for similar items in EconPapers)
JEL-codes: C68 D58 O17 O54 (search for similar items in EconPapers)
Date: 2016
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