Equitable Redistribution and Inefficiency under Credit Rationing

Document Type

Research Article

Abstract

It has been argued in many policy circles that lack of access to credit by the poor may be a source of inefficiency in developing economies. Then, conventional wisdom may suggest that asset redistribution from the rich to the poor improves efficiency. In contrast, we develop a general equilibrium model with credit market and show that such an egalitarian redistribution of assets may indeed lead to inefficiency.

DOI

10.1515/bejeap-2024-0332

Publication Date

7-2-2025

Journal

The B.E. Journal of Economic Analysis and Policy

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