This paper studies the influence of debt financing on the investment behavior of firms. The empirical analysis is based on the Euler equation governing the optimal level of investment in the presence of convex adjustment costs of capital as well as agency costs associated with borrowing in...

In this essayu a customer market model is constructed , where an entrepreneur-owned firm as two choice variable, namely the customer stock and the capital stock. The firm is assumed to be completely credit rationed and the investment procedure is characterised by time-to-built. The model is...

In recent research age distribution effects on the current account have been found in cross-country panel regressions. The reason is different effects on saving and investment from cohort-size variation. In a panel of annual OECD data 1960-1995, we find that the age effects on saving are similar...

The paper shows that a corporate tax policy which is thought to be neutral may have significant incentive effects. This result is established in a model with tax advantage to debt and expectations about a forthcoming tax reform. Investment spurt effects are established and compared to those of a...

We analyze households' joint investment decisions for financial wealth and homes. We use a bivariate censored regression model with endogenous switching. Fixed costs or transaction costs are captured by an unobserved nonzero censoring threshold. The model allows for spill-over effects of a...