| 来源类型 | Discussion paper |
| 规范类型 | 论文 |
| 来源ID | DP15055 |
| DP15055 Support for Small Businesses amid COVID-19 | |
| Charles A. E. Goodhart; Dimitrios P Tsomocos; Xuan Wang | |
| 发表日期 | 2020-07-17 |
| 出版年 | 2020 |
| 语种 | 英语 |
| 摘要 | A sizeable proportion of enterprises, especially SMEs, in receipt of financial assistance from the government, will fail to repay. In this paper we asked whether, and to what extent, it may be beneficial to apply a screening mechanism to deter those mostly likely to fail to repay from seeking such financial assistance in the first place. The answer largely turns on the relative weights attached for the objectives of stabilisation as compared with allocative efficiency. For this purpose, we develop a two-sector infinite horizon model featuring oligopolistic small businesses and a screening contract in the presence of a pandemic shock with asymmetric information. The adversely affected sector with private information can apply for government loans to reopen businesses once the pandemic has passed. First, we show that a pro-allocation government sets a harsh default sanction to deter entrepreneurs with bad projects from reentering and improves aggregate productivity in the long run, but the economy suffers persistent unemployment in the near term. However, a pro-stabilisation government sets a lenient default sanction or provides full guarantees to reach full employment in the short term, but the economy will be shifted to a lower equilibrium in the long run. The optimal default sanction balances the trade-off between allocation and stabilisation. Then, we derive an analytic measure of “Stabilisation Proclivity” and characterise the parameter space and the macro-financial frictions that render the government either more pro-allocation or more pro-stabilisation. Finally, we solve for the optimal default sanction numerically and conducts comparative statics for various policy analyses. |
| 主题 | Monetary Economics and Fluctuations |
| 关键词 | Covid-19 Government guarantees Optimal default sanction Unemployment Productivity Adverse selection Private information Screening |
| URL | https://cepr.org/publications/dp15055 |
| 来源智库 | Centre for Economic Policy Research (United Kingdom) |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/544008 |
| 推荐引用方式 GB/T 7714 | Charles A. E. Goodhart,Dimitrios P Tsomocos,Xuan Wang. DP15055 Support for Small Businesses amid COVID-19. 2020. |
| 条目包含的文件 | 条目无相关文件。 | |||||
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