which assumes a risk of bankruptcy and its associated costs; under these circumstances, the firm faces an increasing cost of … capital as a function of its debt/equity ratio. Domestic and foreign investment will be interdependent, since, in competing … for finance, each affects the cost of capital in the other location. Production interactions can arise when, because of …

with an eye to rehabilitating convex costs of adjusting the capital stock. In recent firm-level work, the response of …, implying annual capital-stock adjustment speeds on the order of 15 to 35 percent. In aggregate data, I find that this … "fundamentalist" model can account for the reduced-form effect of output on investment and the estimated capital-stock adjustment …

When economic capital is calculated using a portfolio model of credit value-at-risk, the marginal capital requirement …-based capital rules, including both the current Basel Accord and its proposed revision, assign a capital charge to an instrument … based only on its own characteristics. I demonstrate that ratings-based capital rules can be reconciled with the general …

High-powered incentives may induce higher managerial effort, but they also expose managers to idiosyncratic risk. If … managers are risk averse, they might underinvest when firm-specific uncertainty increases, leading to suboptimal investment … decisions from the perspective of well-diversified shareholders. We empirically document that when idiosyncratic risk rises …

Within the past two years, important advances have been made in modeling credit risk at the portfolio level … especially influential benchmarks for credit risk models, J.P. Morgan's CreditMetrics and Credit Suisse Financial Product …

find a significantly negative long-run effect of higher uncertainty on capital accumulation, which is robust to the … uncertainty on capital accumulation. In addition, we find a significantly negative short-run interaction term between share price …

A cash-in-advance constraint on consumption is incorporated into a standard model of consumption and capital …

This paper provides direct measures of the international mobility of long-term financial capital using interest … evidence, discussed below, indicates that long-term financial capital is as mobile across these markets as is short …-term capital. This appears to be the case both within the Euromarkets and across political jurisdictions. …