ON THE INCIDENCE OF SELECTIVE CREDIT AND RELATED POLICIES IN A MULTI‐ASSET FRAMEWORK

Abstract

This paper attempts to analyze the asset yield and price effects of these three policy approaches: asset subsidy (tax) schemes, government intermediaries, and production-oriented subsidies (taxes). These effects are important in determining the various policies' incidence (i.e., income distribution effects) which provides the focus for the paper. However, certain results which bear on resource allocation effects will also be brought out. The analysis employs a general equilibrium asset-market model of the Tobin-Brainard variety. The multi-asset framework is necessitated by the type of policy analysis and comparisons being made here. An additional motivation is the absence of this framework from most incidence studies of asset policies. To provide some perspective on the analysis and results, we first make a brief assessment of approaches used in current studies.