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An Analysis of the Cost of the Supporting and Guarantee Agricultural and Forestry Fund (SGAFF) in the Czech Republic

Author

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  • Karel JANDA

    (Transgas-RWE Chair in Economics and the Department of Microeconomics and Mathematical Methods, Charles University, Prague and the Department of Banking and Insurance, University of Economics, Prague)

Abstract

The paper analyzes the cost to the Czech state budget of the Supporting and Guarantee Agricultural and Forestry Fund (SGAFF). In the empirical part of the paper, the author shows that the SGAFF portfolio has sufficient value to cover the expected costs of the credit guarantees and subsidies offered by the fund. The theoretical model looks at government interventions designed to decrease the credit rationing of farmers with high probability of success. The theoretical model shows that, with uniform non-targeted supports, the Czech government unambiguously prefers lump-sum guarantees to interest-rate subsidies. With support targeted wholly to disadvantaged farmers, the cost of lump-sum guarantees, proportional guarantees, and interest-rates subsidies are all equal.

Suggested Citation

  • Karel JANDA, 2006. "An Analysis of the Cost of the Supporting and Guarantee Agricultural and Forestry Fund (SGAFF) in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 56(09-10), pages 416-434, September.
    • Handle: RePEc:fau:fauart:v:56:y:2006:i:9-10:p:416-434
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    References listed on IDEAS

    as
    1. Karel Janda, 2003. "Credit guarantees in a credit market with adverse selection," Prague Economic Papers, Prague University of Economics and Business, vol. 2003(4), pages 331-349.
    2. Gale, William G, 1991. "Economic Effects of Federal Credit Programs," American Economic Review, American Economic Association, vol. 81(1), pages 133-152, March.
    3. Karel Janda, 1994. "Modelování rizika akciového portfolia (Modelling Risks of Share Portfolio)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 44(9), pages 463-472, September.
    4. Dwight M. Jaffee & Thomas Russell, 1976. "Imperfect Information, Uncertainty, and Credit Rationing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(4), pages 651-666.
    5. Xavier Freixas & Jean-Charles Rochet, 1997. "Microeconomics of Banking," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061937, April.
    6. R. Glenn Hubbard, 1990. "Asymmetric Information, Corporate Finance, and Investment," NBER Books, National Bureau of Economic Research, Inc, number glen90-1.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    credit; guarantees; subsidies; transition;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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