Piketty’s laws with investment replacement and depreciation

Ton van Schaik, 6 July 2014

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Thomas Piketty has recently drawn worldwide attention with the proposition that the disparity between wage earners and capital owners is increasing, and that governments should intervene to bring this process to a standstill.

Topics: Frontiers of economic research, Macroeconomic policy
Tags: capital depreciation, investment

Do all firms have equal access to external financing?

Neil Kay, Gavin Murphy, Conor O'Toole, Iulia Siedschlag, Brian O'Connell, 29 June 2014

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The proportion of bank loan acceptances has fallen significantly following the crisis, along with the level of enterprise investment. The sharpest falls in both have been in countries hardest hit by the crisis.

Topics: EU policies, Financial markets
Tags: borrowing, credit, credit rationing, Finance, information asymmetries, investment, lending, SMEs

Lacklustre investment in the Eurozone: Is there a puzzle?

Marco Buti, Philipp Mohl, 4 June 2014

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On the importance of investment for the Eurozone economy

According to the European Commission’s most recent forecast, real economic activity in the Eurozone is expected to recover at a moderate pace until 2015, and to remain significantly weaker than in the US (European Commission 2014a).

Topics: EU policies, Macroeconomic policy
Tags: banking union, Bankruptcy, European Commission, eurozone, Eurozone crisis, financial fragmentation, growth, investment, public investment, structural reforms, uncertainty

US electrification in the 1930s

Carl Kitchens, 29 January 2014

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In 1930, fewer than 10% of farms in the US had access to electricity. By the mid-1950s, almost every farm in the country had electricity. While the US was able to extend electricity to its rural locations rapidly over a 25-year period, much of the developing world still remains without electricity today. In 2012, 1.3 billion people lived without electricity worldwide.

Topics: Development, Economic history
Tags: Agriculture, electricity, electrification, growth, infrastructure, investment, subsidies, technology

Why Asian firms hold cash

Charles Yuji Horioka, Akiko Terada-Hagiwara, 25 January 2014

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In many, if not most, economies, sharp declines in household saving rates have been offset by sharp increases in corporate saving rates for the past two decades (see, for example, Karabarbounis and Neiman 2012). Even so, relatively little research has been done on the determinants of corporate saving.

Topics: Financial markets
Tags: Asia, borrowing constraints, corporate saving, financial frictions, investment, saving, savings

Dark side of housing-price appreciation

Indraneel Chakraborty, Itay Goldstein, Andrew MacKinlay, 25 November 2013

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Policymakers around the world often worry about decreases in real-estate prices and other asset prices, and take measures to prevent them. For example, in the aftermath of the financial crisis, the Federal Reserve has engaged in large-scale asset purchases – especially of mortgage-backed assets – to support the housing market and, in turn, the overall economy.

Topics: Financial markets, Monetary policy
Tags: asset prices, banks, Federal Reserve, housing, investment, lending, real estate

How to get around credit constraints? The role of renting and leasing during financial crises

Peter N. Gal, Gabor Pinter, 21 September 2013

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How does the ownership of capital affect the aggregate behaviour of the economy? Does it matter whether firms own or rent production capital such as machinery, equipment, offices, and structures?

Topics: Financial markets
Tags: business cycles, credit constraints, financial crises, investment, rental markets

Informal or formal financing: First evidence on co-funding of Chinese firms

Hans Degryse, Liping Lu, Steven Ongena, 21 August 2013

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The credit squeeze in June 2013 has triggered policymakers’ concern worldwide about a potential debt crisis in China, while at the same time the Chinese government has moved to crack down on undisciplined lending in order to alleviate the debt-bubble fears emanating from the shadow banking system.1 

Topics: Development, Financial markets
Tags: China, Finance, investment

Save more to improve infrastructure in Latin America and the Caribbean

Eduardo Cavallo, 3 April 2013

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Saving and investment, like the chicken and the egg, involve circular causality. But regardless of causality, there is no doubt that Latin America and the Caribbean need more of both.

That the region has an infrastructure problem hardly requires an explanation:

Topics: Development
Tags: Caribbean, investment, Latin America, savings

Fire-sale FDI: All smoke and no fire?

Ron Alquist, Linda Tesar, Rahul Mukherjee, 26 March 2013

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When times are bad, governments tend to welcome foreign direct investment, but they worry that they are selling the family silver for cheap. This ‘fire-sale FDI’ phenomenon, as Krugman called it in the 1990s, is a perennial concern of nations whose currencies have recently plummeted.

Topics: Development
Tags: FDI, fire-sale FDI, investment

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