Over the past decade, a number of researchers have extended conventional models of business fixed investment to … incorporate a role for financial constraints' in determining investment. This paper reviews developments and challenges in this … challenges. First, I describe analytical underpinnings of models of capital-market imperfections in the investment process, and …

returns on those investments) has important implications for the saving, investment, and entry decisions of continuing and … potential entrepreneurs. These effects are similar in spirit to the role played by costly external financing on investment by … conclusion that entrepreneurial saving and investment decisions are interdependent raises three areas for future research: (1 …

In this paper, we summarize recent advances in the study of effects of tax policy on the fixed investment decisions of … long-run tax policy that favors business investment spending …

research that uses cross-sectional differences in firm behavior to test for financing constraints on investment. This reply … of internal finance. Second, the KZ regression results (lower sensitivity of investment to cash flow for firms classified …

We use firm-level panel data to explore the extent to which fixed investment responds to tax reforms in 14 OECD … countries. Previous studies have often found that investment does not respond to changes in the marginal cost of investment. We … of them. In so doing, we find evidence of statistically and economically significant investment responses to tax changes …

We examine the neoclassical investment model using a panel of U.S. manufacturing firms. The standard model with no … for firms with low (pre-sample) payouts (firms we expect to face financing constraints). Hem, investment is sensitive to … both firm cash flow and macroeconomic credit conditions, holding constant investment opportunities. Sample splits based on …

Recent theoretical approaches have linked shifts in firms' internal funds and investment spending, holding constant … underlying investment opportunities. An important impediment to convincing tests of these models is the lack of firm-level data …) in the 1930s, to identify firms' relative cost of internal and external funds and analyze its effect on firms' investment …

Most empirical models of investment rely on the assumption that firms are able to respond to prices set in centralized … determinant of investment spending, because of a "financing hierarchy," in which internal finance has important cost advantages … cost of capital, asset prices, or tax-based investment incentives. To the extent that firms are constrained in their …