AbstractConstruction is not the best use of capital when the objective is to make jobs, and loanable funds are scarce. Construction is more capital-intensive than labor-intensive. In addition, we presently have a glut of finished but unused buildings, the result of years of fiscal bias that has diverted investors from working capital to construction. Lenders have also been diverted by the use of soaring and volatile land values as collateral. The solution is to reverse the fiscal biases, which are identified, and apply selective credit controls to lenders, keeping them away from depending on real estate collateral.
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Bibliographic InfoPaper provided by University of California at Riverside, Department of Economics in its series Working Papers with number 200903.
Length: 6 pages
Date of creation: Jan 2009
Date of revision: Jan 2009
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
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