The Cost-Benefit Analysis of Government Loams

Robert Brent

Public Finance Review, 1991, vol. 19, issue 1, 43-66

Abstract: A neglected area of cost-benefit theory is the evaluation of federal government loans Abstract to finance private investment. This article builds on a model by Feldstein (1973) which disaggregated public investment decisions into two parts; one is the expenditure on the good to be purchased by the loan, and the other is the loan itself. The main new result is that distributional considerations can be divorced from economic efficiency in making the first (expenditure) decision. Distributional factors are used to help determine the second (financing) decision. The two-decision framework is applied to FmHA loans made in New York State.

Date: 1991
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:19:y:1991:i:1:p:43-66

DOI: 10.1177/109114219101900103

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