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Abstract

The objectives and relative effectiveness of different methods of providing temporary assistance to a particular industry experiencing a significant reduction in returns and liquidity are evaluated. It is doubtful that assistance can be justified for resource efficiency reasons. This is argued to be so when the cause of the downturn in industry returns is due to temporary factors, such as drought, and when it is due to long-term trend factors, such as economic growth. While an industry slump can cause welfare problems, most households are able to use contingency strategies, e.g. savings, or resort to existing welfare programs, e.g. unemployment benefits. Direct income grants are preferable to output and input subsidies as means of providing welfare assistance.

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