Abstract
Regionally differentiated interest rate subsidies are assumed to have on theoretical grounds both a generative and a redistributive impact on investment. In the conventional econometric approach, these effects are captured by the interest rate parameters that appear in regional investment functions which are usually estimated by single equation methods. This paper focusses on the redistributive impact of regional interest subsidies. The theoretical framework choosen for the analysis is that of a multiregional firm that maximizes overall profits subject to a capital cost constraint. The resulting allocation model for capital stock is similar to a system of consumer demand equations. It is estimated by a maximum likelihood method. The empirical results indicate that the redistributive effects of interest rate subsidies are significant.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
