Devereux, Michael and Demetriades, Panicos (2000) Investment and financial restraints: theory and evidence. International Journal of Finance & Economics, 5 (4). pp. 285-296.Full text not available from this repository.
This paper examines investment decisions in an economy with two financial markets: an official market, which is subject to rationing due to an interest rate ceiling, and an unrestricted market, with a higher interest rate. In this context, the long-run equilibrium aggregate capital stock is unambiguously higher than in the absence of the interest rate ceiling, even though its relationship with the ceiling is non-monotonic. Empirical results using aggregate panel data from 52 developing countries for the period 1974–1988 provide support for the model, particularly in economies that have some access to international capital markets.
|Keywords:||economic growth; financial restraints; investment|
|Centre:||Oxford University Centre for Business Taxation|
|Date Deposited:||01 Dec 2011 16:07|
|Last Modified:||23 Oct 2015 14:06|
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