In this paper we analyze the interaction between subsidies, soft budget con- straints and financial market imperfections in a simple model of occupational choice. The basic message is that the e ect of soft budget constraints has to be analyzed jointly with other possible distortions that are affecting the economy. In particu- lar in environments where there are severe forms of financial market imperfections, subsidies and soft budget constraints can ease those imperfections and reduce credit rationing problems. The "positive" effect of soft budget constraints depends also upon the degree of institutional failure of the economy.

Valentinyi, A., Colombo, E. (2002). Subsidies, Soft Budget Constraints and Financial Market Imperfections [Working paper del dipartimento].

Subsidies, Soft Budget Constraints and Financial Market Imperfections

COLOMBO, EMILIO
2002

Abstract

In this paper we analyze the interaction between subsidies, soft budget con- straints and financial market imperfections in a simple model of occupational choice. The basic message is that the e ect of soft budget constraints has to be analyzed jointly with other possible distortions that are affecting the economy. In particu- lar in environments where there are severe forms of financial market imperfections, subsidies and soft budget constraints can ease those imperfections and reduce credit rationing problems. The "positive" effect of soft budget constraints depends also upon the degree of institutional failure of the economy.
Working paper del dipartimento
Scientifica
Subsidies; Soft Budget Constraints; Financial Market Imperfections
English
Valentinyi, A., Colombo, E. (2002). Subsidies, Soft Budget Constraints and Financial Market Imperfections [Working paper del dipartimento].
Valentinyi, A; Colombo, E
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/22970
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