caa a22 4500 60547561X CHVBK 20210128100352.0 cr unu---uuuuu 210128e20150101xx s 000 0 eng 10.1007/s00199-014-0808-0 doi (NATIONALLICENCE)springer-10.1007/s00199-014-0808-0 The effects of credit subsidies on development [Elektronische Daten] [António Antunes, Tiago Cavalcanti, Anne Villamil] Under credit market imperfections, the marginal product of capital may not be equalized, resulting in misallocation and lower output. Preferential interest rate policies are often used to remedy the problem. This paper constructs a general equilibrium model with heterogeneous agents, imperfect enforcement and costly intermediation. Occupational choice and firm size are determined endogenously by an agent's type (ability and net wealth) and credit market frictions. The credit program subsidizes the interest rate on loans and requires a fixed application cost, which might be null. We find that the credit subsidy policy has no significant effect on output, but it may have negative effects on wages. The program is largely a transfer from households to a small group of entrepreneurs with minor aggregate effects. We also provide estimates of the effects of reducing the frictions directly. When comparing differences in US output per capita in a baseline case to simulations with counterfactually high frictions, intermediation costs and enforcement explain about 20-25% of the output gap. We include a transition analysis. Springer-Verlag Berlin Heidelberg, 2014 Financial frictions nationallicence Credit subsidy nationallicence Entrepreneurship nationallicence Antunes António Departamento de Estudos Económicos, Banco de Portugal, Lisbon, Portugal aut Cavalcanti Tiago Faculty of Economics, University of Cambridge, Cambridge, UK aut Villamil Anne Department of Economics, University of Iowa, Iowa City, IA, USA aut Economic Theory Springer Berlin Heidelberg 58/1(2015-01-01), 1-30 0938-2259 58:1<1 2015 58 199 https://doi.org/10.1007/s00199-014-0808-0 text/html Onlinezugriff via DOI BK010053 XK010053 XK010000 Metadata rights reserved Springer special CC-BY-NC licence nationallicence 1 research-article jats NATIONALLICENCE NATIONALLICENCE NL-springer NATIONALLICENCE 856 40 https://doi.org/10.1007/s00199-014-0808-0 text/html Onlinezugriff via DOI NATIONALLICENCE 700 1- Antunes António Departamento de Estudos Económicos, Banco de Portugal, Lisbon, Portugal aut NATIONALLICENCE 700 1- Cavalcanti Tiago Faculty of Economics, University of Cambridge, Cambridge, UK aut NATIONALLICENCE 700 1- Villamil Anne Department of Economics, University of Iowa, Iowa City, IA, USA aut NATIONALLICENCE 773 0- Economic Theory Springer Berlin Heidelberg 58/1(2015-01-01), 1-30 0938-2259 58:1<1 2015 58 199