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Financial and labor market imperfections and investment

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  • Calcagnini, Giorgio
  • Giombini, Germana
  • Saltari, Enrico

Abstract

This paper analyses how financial and labor market imperfections jointly influence investment. The contemporaneous presence of imperfections gives rise to a negative correlation between EPL and investment. Our results support the policies promoted by European institutions to reform both markets.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 102 (2009)
Issue (Month): 1 (January)
Pages: 22-26

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Handle: RePEc:eee:ecolet:v:102:y:2009:i:1:p:22-26

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Web page: http://www.elsevier.com/locate/ecolet

Related research

Keywords: Investment models Financing constraints Labor protection legislation Panel data models;

References

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  1. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  2. Beck, Thorsten & Asl Demirguc-Kunt & Maksimovic, Vojislav, 2002. "Financing patterns around the world : the role of institutions," Policy Research Working Paper Series 2905, The World Bank.
  3. Bond, Stephen & Meghir, Costas, 1994. "Dynamic Investment Models and the Firm's Financial Policy," Review of Economic Studies, Wiley Blackwell, vol. 61(2), pages 197-222, April.
  4. Dixit, Avinash K, 1989. "Entry and Exit Decisions under Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 620-38, June.
  5. Inessa Love, 2003. "Financial Development and Financing Constraints: International Evidence from the Structural Investment Model," Review of Financial Studies, Society for Financial Studies, vol. 16(3), pages 765-791, July.
  6. Alesina, Alberto F & Ardagna, Silvia & Nicoletti, Giorgio & Schiantarelli, Fabio, 2003. "Regulation and Investment," CEPR Discussion Papers 3851, C.E.P.R. Discussion Papers.
  7. Joao F. Gomes, 2001. "Financing Investment," American Economic Review, American Economic Association, vol. 91(5), pages 1263-1285, December.
  8. Cleary, Sean & Povel, Paul E M & Raith, Michael, 2004. "The U-Shaped Investment Curve: Theory and Evidence," CEPR Discussion Papers 4206, C.E.P.R. Discussion Papers.
  9. Sterken, Elmer & Lensink, Robert & Bo, Hong, 2001. "Investment, cash flow, and uncertainty: evidence for the Netherlands," CCSO Working Papers 200114, University of Groningen, CCSO Centre for Economic Research.
  10. Belke, Ansgar & Gocke, Matthias & Hebler, Martin, 2005. "Institutional uncertainty and European Social Union: Impacts on job creation and destruction in the CEECs," Journal of Policy Modeling, Elsevier, vol. 27(3), pages 345-354, April.
  11. Ansgar Belke & Rainer Fehn, 2000. "Institutions and Structural Unemployment: Do Capital Market Imperfections Matter?," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 190/2000, Department of Economics, University of Hohenheim, Germany.
  12. Pissarides, Christopher A., 2001. "Employment protection," Labour Economics, Elsevier, vol. 8(2), pages 131-159, May.
  13. Saint-Paul, Gilles, 2004. "Macroeconomic Fluctuations and the Timing of Labor Market Reform," IDEI Working Papers 314, Institut d'Économie Industrielle (IDEI), Toulouse.
  14. Andrew B. Abel & Janice C. Eberly, 1993. "A Unified Model of Investment Under Uncertainty," NBER Working Papers 4296, National Bureau of Economic Research, Inc.
  15. Saint-Paul, Gilles, 2002. "Some Thoughts on Macroeconomic Fluctuations and the Timing of Labor Market Reform," IZA Discussion Papers 611, Institute for the Study of Labor (IZA).
  16. Steven M. Fazzari & R. Glenn Hubbard & BRUCE C. PETERSEN, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
  17. Timothy Erickson & Toni M. Whited, 2000. "Measurement Error and the Relationship between Investment and q," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 1027-1057, October.
  18. Giovanni Pica, 2001. "Labour Demand and Financial Markets Imperfections," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2001(73).
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Citations

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Cited by:
  1. Federico Cingano & Marco Leonardi & Julián Messina & Giovanni Pica, 2013. "Employment Protection Legislation, Capital Investment and Access to Credit: Evidence from Italy," Development Working Papers 354, Centro Studi Luca d\'Agliano, University of Milano.
  2. Saltari, Enrico & Travaglini, Giuseppe, 2011. "Optimal abatement investment and environmental policies under pollution uncertainty," MPRA Paper 35072, University Library of Munich, Germany.
  3. Enrico Saltari, 2012. "The role of ICT and Business Services in Italy," Working Papers 152, University of Rome La Sapienza, Department of Public Economics.
  4. Calcagnini, Giorgio & Travaglini, Giuseppe, 2014. "A time series analysis of labor productivity. Italy versus the European countries and the U.S," Economic Modelling, Elsevier, vol. 36(C), pages 622-628.

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