Long Term Impacts of One Off Grants to Microenterprises
Traditional economic models of investment such as the Ramsey model would predict that such grants should have at most temporary effects. In such models, there is an efficient steady state size for a business conditional on the ability of the owner....
| Main Authors: | , , |
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| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2012/02/16240747/long-term-impacts-one-off-grants-microenterprises http://hdl.handle.net/10986/10060 |
| Summary: | Traditional economic models of
investment such as the Ramsey model would predict that such
grants should have at most temporary effects. In such
models, there is an efficient steady state size for a
business conditional on the ability of the owner. A positive
shock to capital in such a model will have only temporary
effects, speeding up convergence to this steady state, but
those firms that did not receive the grants should be able
to catch up over time by taking advantage of the high
returns to capital and reinvesting in their business. The
results highlight that a one-off grant can have a lasting
impact on some types of microenterprises. This has
implications both for charitable giving, and for
policymakers deciding which types of microenterprises to
target for assistance. |
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