The impact of imperfections in financial markets on firm-level investment varies greatly across industries. In particular, it appears that the choices of firms producing capital goods are more likely to be constrained by financial factors. We argue that this is the case because the intrinsic...

Recent empirical evidence has suggested a positive association between various measures of investor protection and financial market development, and between financial market development and economic growth. We introduce investor protection in a simple extension of the two-period overlapping...

Does investor protection foster economic growth? To assess the widely held affirmative view, we introduce investor protection into a standard overlapping generations model of capital accumulation. Better investor protection implies better risk sharing. Because of entrepreneurs' risk aversion,...

Poor countries have lower PPP–adjusted investment rates and face higher relative prices of investment goods. It has been suggested that this happens either because these countries have a relatively lower TFP in industries producing capital goods, or because they are subject to greater...

Poor countries have lower PPP–adjusted investment rates and face higher relative prices of investment goods. It has been suggested that this happens either because these countries have a relatively lower TFP in industries producing capital goods, or because they are subject to greater...