Subsidies, Soft Budget Constraints and Financial Market Imperfections
AbstractIn 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.
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Bibliographic InfoPaper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 50.
Length: 24 pages
Date of creation: Feb 2002
Date of revision: Feb 2002
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Simon Johnson & John McMillan & Christopher Woodruff, 1999. "Property Rights, Finance, and Entrepreneurship," CESifo Working Paper Series 212, CESifo Group Munich.
- Haizhou Huang & Chenggang Xu, 2000.
"Financial Institutions, Financial Contagion, and Financial Crises,"
William Davidson Institute Working Papers Series
316, William Davidson Institute at the University of Michigan.
- Haizhou Huang & Chenggang Xu, 2000. "Financial Institutions, Financial Contagion, and Financial Crises," IMF Working Papers 00/92, International Monetary Fund.
- Haizhou Huang & Chenggang Xu, 1999. "Financial Institutions, Financial Contagion, and Financial Crises," CID Working Papers 21, Center for International Development at Harvard University.
- Huang, H. & Xu, C., 2000. "Financial Institutions, Financial Contagion, and Financial Crises," Papers 21, Chicago - Graduate School of Business.
- Haizhou Huang, 2000. "Financial Institutions, Financial Contagion, and Financial Crises," Econometric Society World Congress 2000 Contributed Papers 1595, Econometric Society.
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