Using Credit Subsidies to Counteract a Credit Bust : Evidence From Serbia

Author/Editor:

Jiri Podpiera

Publication Date:

December 1, 2011

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Emerging markets are particularly vulnerable to boom-bust credit cycles, due to excessive capital flows, shallow equity markets, and companies' high leverage and open FX positions. While the policy debate on how to respond to boom-bust credit cycles remains unsettled, it has been conjectured that credit subsidies may provide a particularly effective policy tool to counter a credit bust. This paper reports on a rare policy experiment where credit subsidies were used to buffer the impact of the global financial crisis on Serbia in 2009. Model simulations suggest that credit subsidies in Serbia helped to mitigate the slump in output.

Series:

Working Paper No. 11/285

Subject:

English

Publication Date:

December 1, 2011

ISBN/ISSN:

9781463927196/1018-5941

Stock No:

WPIEA2011285

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

21

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