Investments and financial structure with imperfect financial markets: an intertemporal discrete-time framework
AbstractThis paper deals with the problem of simultaneity between the firm's investments and financial structure, in a context of dynamic optimization, characterised by two main assumptions: first of all, diverging incentives for managers and shareholders, secondly, financial markets imperfections generating a risk premium on the borrowed finance. A ''discrete-time'' framework has been introduced in order to better model the relevance of timing in the co-ordination process between financial and investment decisions, assumed to take place simultaneously. The simple model proposed here may provide some intuitive interpretation for a number of phenomena such as the propagation of financial shocks into the real economy and the countercyclical mark-ups.
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Bibliographic InfoPaper provided by Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica in its series Heterogeneity and monetary policy with number 0008.
Length: pages 14
Date of creation: Jul 2000
Date of revision:
investments; financing policy.;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kurz, Mordecai, 1994. "On Rational Belief Equilibria," Economic Theory, Springer, vol. 4(6), pages 859-76, October.
- Michel Poitevin, 1989. "Collusion and the Banking Structure of a Duopoly," Canadian Journal of Economics, Canadian Economics Association, vol. 22(2), pages 263-77, May.
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