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Credit Market Failures and Policy |
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| Authors: | ENRICO MINELLI SALVATORE MODICA |
| Institution: | Universitàdi Brescia; Universitàdi Palermo |
| Abstract: | In a simplified version of the Stiglitz and Weiss (1981) model of the credit market we characterize optimal policies to correct market failures. Widely applied policies, notably interest-rate subsidies and investment subsidies, are compared to the theoretical optimum. |
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