Investment facing Credit Rationing
Jean-Bernard Chatelain ()
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The explicit expression of investment facing credit rationing and convex adjustment costs is derived. Three implications follow. First, the assumption of convex adjustment costs can be substituted by credit rationing to derive an investment function. Second, it explains how credit rationing acts as a 'financial brake' at the bottom of a slump, when investment demand is high and collateral is low. Third, it allows the explicit Lagrange multiplier related to credit rationing to be derived and misspecification in recent empirical work to be checked.
Keywords: Investment; Credit Rationing; Convex Adjustment Costs (search for similar items in EconPapers)
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Published in Manchester School, Wiley, 1998, 66 (S), pp.102-115. ⟨10.1111/1467-9957.66.s.6⟩
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Journal Article: Investment Facing Credit Rationing (1998)
Working Paper: Investment facing Credit Rationing (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00432132
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