Do Debt Flows Crowd out Equity Flows or the Other Way Round?

Assaf Razin, Efraim Sadka and C.-W. Yuen

Working Papers from Tel Aviv

Abstract: In the presence of asymmetric information, the stage at which investment-financing decisions are made is crucial for the composition of international capital flows as well as for the efficiency of channeling savings into investment. This paper compares the implications of two extreme assumptions regarding the information possessed by the firms at their financing stage for thether foreign debt inflows may crowd out foreign equity flows or the other way round. The scope for corrective tax policy is examined. A welfare comparison between the two mechanisms of capital flows is provided.

Keywords: ASYMETRIC INFORMATION; INVESTMENTS; CAPITAL FLOWS (search for similar items in EconPapers)
JEL-codes: D82 F21 F22 (search for similar items in EconPapers)
Pages: 17 pages
Date: 1998
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Related works:
Journal Article: Do Debt Flows Crowd Out Equity Flows or the Other Way Round? (2000)
Working Paper: Do Debt Flows Crowd Out Equity Flows or the Other Way Round? (2000)
Working Paper: Do Debt Flows Crowd Out Equity Flows Or the Other Way Round? (2000)
Working Paper: Do Debit Flows Crowd out Equity Flows or the other way Round? (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:teavfo:17-98

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