Do Debt Flows Crowd out Equity Flows or the Other Way Round?
AbstractIn the presence of asymmetric information, the stage at which investment-financing decisions are made is crucial for the composition of international capital flows as well as for the efficiency of channeling savings into investment. This paper compares the implications of two extreme assumptions regarding the information possessed by the firms at their financing stage for thether foreign debt inflows may crowd out foreign equity flows or the other way round. The scope for corrective tax policy is examined. A welfare comparison between the two mechanisms of capital flows is provided.
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Bibliographic InfoPaper provided by Tel Aviv in its series Papers with number 17-98.
Length: 17 pages
Date of creation: 1998
Date of revision:
Contact details of provider:
Postal: Israel TEL-AVIV UNIVERSITY, THE FOERDER INSTITUTE FOR ECONOMIC RESEARCH, RAMAT AVIV 69 978 TEL AVIV ISRAEL.
Web page: http://econ.tau.ac.il/research/foerder.asp
More information through EDIRC
ASYMETRIC INFORMATION ; INVESTMENTS ; CAPITAL FLOWS;
Other versions of this item:
- Assaf Razin & Efraim Sadka & Chi-Wa Yuen, 2000. "Do Debt Flows Crowd Out Equity Flows or the Other Way Round?," Annals of Economics and Finance, Society for AEF, vol. 1(1), pages 33-47, May.
- Assaf Razin & Efraim Sadka & Chi-Wa Yuen, 1999. "Do Debt Flows Crowd Out Equity Flows or the Other Way Round?," CEMA Working Papers 3, China Economics and Management Academy, Central University of Finance and Economics, revised Apr 2000.
- Assaf Razin & Efraim Sadka & Chi-Wa Yuen, 1998. "Do Debit Flows Crowd out Equity Flows or the other way Round?," CEMA Working Papers: Serie Documentos de Trabajo. 137, Universidad del CEMA.
- Assaf Razin & Efraim Sadka & Chi-Wa Yuen, 2000. "Do Debt Flows Crowd Out Equity Flows Or the Other Way Round?," NBER Working Papers 7736, National Bureau of Economic Research, Inc.
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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