Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/100859 
Year of Publication: 
1998
Series/Report no.: 
Working Paper No. 98-2
Publisher: 
Federal Reserve Bank of Atlanta, Atlanta, GA
Abstract: 
Credit rationing is a common feature of most developing economies. In response to it, the governments of these countries often operate extensive credit programs and lend, either directly or indirectly, to the private sector. We analyze the macroeconomic consequences of a typical government credit program in a small open economy. We show that such programs increase long-run production if the economy is in a development trap and that such programs often lead to endogenously arising aggregate volatility. On the other hand, they may eliminate certain indeterminacies created by endogenous credit market frictions.
Subjects: 
Banks and banking
Central
Credit
Productivity
Document Type: 
Working Paper

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