In this paper, we develop a dynamic model of optimal investment for shareholders by using the utility-indifference pricing theory. The marginal value of cash holdings is measured in shareholder's marginal utility of cash. The model predicts that the marginal value of cash varies negatively with...

This paper asks whether government investment "crowds out" or "crowds in" private investment in China. We divide government capital expenditures into two types: (1) investment that serves to provide public goods and infrastructure, and (2) investment in private industry and commerce. The results...