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Structural Modelling of Financial Constraints on Investment: Where Do We Stand?

  • Jean-Bernard Chatelain

    ()

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

This paper surveys issues with respect to the structural modelling of econometric tests of investment facing financial constraints, to their link with firms data and asset prices, and to their consequences for macroeconomic modelling. The key issue is to provide conditions which support the interpretation of the sensitivity of investment to liquidity variables such as cash flow as a measure of financial constraints. The structural modelling of investment facing financial constraints is also limited by the structural modelling of the forces driving investment dynamics such as adjustment costs, which has not been so successful empirically.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00112522.

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Date of creation: 2003
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Publication status: Published, Firms' investment and finance decision, Edward Elgar (Ed.), 2003, 40-58
Handle: RePEc:hal:cesptp:halshs-00112522
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00112522
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