IDEAS home Printed from https://ideas.repec.org/p/fip/fedrwp/97-09.html
   My bibliography  Save this paper

Entrepreneurship and government subsidies under capital constraints: a general equilibrium analysis

Author

Listed:
  • Wenli Li

Abstract

This paper studies the interaction of capital constraints with business formation, growth and destruction, and the policy implications of this interaction. A dynamic general equilibrium model is constructed and shown to be consistent with recent empirical finding on this subject. In the model, agents face uninsurable income risk and costly financial intermediation, and they choose to be either a worker or an entrepreneur. A calibrated version of the model is used to examine two government assistance programs: loan guarantees and grants. The main findings are that both programs can improve welfare and that grants outperform the more popular loan guarantees.

Suggested Citation

  • Wenli Li, 1997. "Entrepreneurship and government subsidies under capital constraints: a general equilibrium analysis," Working Paper 97-09, Federal Reserve Bank of Richmond, revised 1997.
  • Handle: RePEc:fip:fedrwp:97-09
    as

    Download full text from publisher

    File URL: http://www.richmondfed.org/publications/research/working_papers/1997/wp_97-9.cfm
    Download Restriction: no

    File URL: http://www.richmondfed.org/publications/research/working_papers/1997/pdf/wp97-9.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zuzana Brixiova & Wenli Li, 1998. "Skill Acquisition and Private Firm Creation in Transition Economies," William Davidson Institute Working Papers Series 162, William Davidson Institute at the University of Michigan.
    2. V. V. Chari & Mikhail Golosov & Aleh Tsyvinski, 2005. "Business Start-ups, The Lock-in Effect, and Capital Gains Taxation," Levine's Bibliography 784828000000000439, UCLA Department of Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedrwp:97-09. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Pascasio). General contact details of provider: http://edirc.repec.org/data/frbrius.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.