earticle

영어

After the 1998 financial crisis in Korea, the government has increased the amount of credit guarantees to provide small business firms with the funds necessary to survive in such a crisis. Recently, the IMF expressed worries over too large ratio of the credit guarantees relative to the gross domestic product, recommending the government to reduce the ratio to the level of other countries. The IMF advice urges us to decide the optimal size of the credit guarantees that is consistent with the economic growth. The policy makers could not easily cut down the credit guarantees, as it will hamper the economic growth by shrinking the investments of small business firms. This fact requires us to take many things into account in calculating the optimal size of the credit guarantees. Our discussion suggests the main findings as follows: The application of the optimal control techniques makes it possible to compute the optimal size of the
credit guarantees that is consistent with several policy objectives, such as the economic growth and the balanced budget, because many of them can be incorporated in the social welfare function.