-specific costs of capital. We show that SOEs did respond to the performance evaluation reform by altering their investment decisions … evidence that incentive schemes affect real investment and sheds new light on challenges faced by economic reforms in China …

west Germany. Excessively high wages coupled with investment incentives that made the cost of capital negative rank high …A political miracle occurred when Germany was reunited, and at first glance an economic miracle has followed. Real … incomes in the east have now reached the western level, and investment per capita has been much higher than in the west …

, potentially spurring productive investment. Low interest rates, however, also induce entrepreneurs to lever up so as to increase … their incentives thereby lowering productivity and discouraging investment. If leverage is unregulated (for example, due to … payouts by stimulating investment in response to adverse shocks only up to a level below the first-best. The optimal monetary …

identification strategies used, critically assess strengths and weaknesses, discuss connections with theory, and draw out potential …