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Explicit Lagrange Multiplier for Firms Facing a Debt Ceiling Constraint

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  • Jean-Bernard Chatelain

    ()
    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

Abstract

This paper provides the explicit expression of investment facing a binding debt ceiling and the explicit expression of the Lagrange multipliers related to the binding debt ceiling constraint. This result allows to check for misspecification of the parameterizations of these Lagrange multipliers used in Euler investment equations tests during the 1990's.

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Bibliographic Info

Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00119408.

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Date of creation: 2000
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Publication status: Published, Economics Letters, 2000, 67, 2, 153-158
Handle: RePEc:hal:cesptp:halshs-00119408

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00119408
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Related research

Keywords: Investment; Credit Rationing;

References

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  1. Gertler, Mark & Hubbard, R. Glenn & Kashyap, Anil, 1990. "Interest Rate Spreads, Credit Constraints, And Investment Fluctuations: An Empirical Investigation," Working Papers, C.V. Starr Center for Applied Economics, New York University 90-46, C.V. Starr Center for Applied Economics, New York University.
  2. Schiantarelli, Fabio, 1996. "Financial Constraints and Investment: Methodological Issues and International Evidence," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 12(2), pages 70-89, Summer.
  3. Robert S. Chirinko, 1992. "Business Fixed Investment Spending: A Critical survey of Modeling Strategies, Empirical Results, and Policy Implications," Working Papers, Harris School of Public Policy Studies, University of Chicago 9213, Harris School of Public Policy Studies, University of Chicago.
  4. Whited, Toni M, 1992. " Debt, Liquidity Constraints, and Corporate Investment: Evidence from Panel Data," Journal of Finance, American Finance Association, American Finance Association, vol. 47(4), pages 1425-60, September.
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Citations

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Cited by:
  1. Chatelain, Jean-Bernard & Ralf, Kirsten & Bruno, Amable, 2010. "Patents as Collateral," MPRA Paper 44698, University Library of Munich, Germany.
  2. Jean-Bernard Chatelain, 2010. "The Profit-Investment-Unemployment nexus and Capacity Utilization in a Stock-Flow Consistent Model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00645155, HAL.
  3. Chatelain, J.-B. & Teurlai, J.-C., 2001. "Pitfalls in Investment Euler Equations," Working papers, Banque de France 81, Banque de France.
  4. repec:hal:journl:halshs-00112522 is not listed on IDEAS
  5. Stéphane Blancard & Jean-Philippe Boussemart & Walter Briec & Kristiaan Kerstens, 2005. "Short- and Long-Run Credit Constraints in French Agriculture: A Directional Distance Function Framework Using Expenditure-Constrained Profit Functions," Working Papers 2005-ECO-02, IESEG School of Management.
  6. Jean-Bernard Chatelain, 2003. "Structural Modelling of Financial Constraints on Investment: Where Do We Stand?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00112522, HAL.

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