Grants Vs. Investment Subsidies

Ashok S. Rai and Tomas Sjostrom

No 84, CID Working Papers from Center for International Development at Harvard University

Abstract: How should a government intervene to help the credit constrained poor? We study an economy where productivity and wealth are unobserved, and loans must be collateralized. We show that the e¢cient policy typically consists of o¤ering both a grant and an investment subsidy. Everybody will take the grant and only the relatively productive will take the subsidy. This policy reduces but does not eliminate investment distortions.

Keywords: credit constraints; collateral; intervention; loan subsidy; grant (search for similar items in EconPapers)
JEL-codes: D82 H20 I38 (search for similar items in EconPapers)
Date: 2001-12
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.hks.harvard.edu/sites/default/files/ce ... /2001-cid-wp-084.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cid:wpfacu:84

Access Statistics for this paper

More papers in CID Working Papers from Center for International Development at Harvard University 79 John F. Kennedy Street. Contact information at EDIRC.
Bibliographic data for series maintained by Chuck McKenney ().