IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Investment, Financing Constraints and the Euler Equation

  • Enrico Saltari
  • Giuseppe Travaglini

In what follows, we show that financing constraints affects firm's investment decisions before the constraints is binding. This occurs because the firm anticipates at the current time the future bound. We argue that, even with imperfect capital markets, investment policy must be such that there are no arbitrage opportunities at any time. Contrary to the usual "expectations view", this forward looking behavior guarantees the respect of the Euler quation even when the restriction is binding, that is the optimality of the constrained investment decisions.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.dipecodir.it/upload/wp/pdf/wp50.pdf
Download Restriction: no

Paper provided by University of Rome La Sapienza, Department of Public Economics in its series Working Papers with number 50.

as
in new window

Length: 25
Date of creation: Feb 2002
Date of revision:
Handle: RePEc:sap:wpaper:wp50
Contact details of provider: Postal: Via Del Castro Laurenziano 9, 00161 Roma
Phone: +39 6 49766353
Fax: +39 6 4462040
Web page: http://www.dipecodir.it/

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:sap:wpaper:wp50. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Luisa Giuriato)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.