formulate a model of financing. New Keynesian theory emphasizes that a firm's net worth influences investment decisions and … banks lending reaction to the net worth ratio is more elastic than investment reaction. When the steady state is the saddle …

holds for the microeconomic response of some of the most important economic variables, such as investment, labor demand, and … actual response to shocks is less than half as fast as the estimated response. For investment, labor demand and prices, the …, even after aggregating investment across all establishments in U.S. manufacturing, the estimate of its speed of adjustment …