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  • 标题:Finance and the Optimal Investment Decisions of a Firm Under Imperfect Competition
  • 本地全文:下载
  • 作者:Toshio Watanabe
  • 期刊名称:The Kyoto Economic Review
  • 印刷版ISSN:1349-6786
  • 电子版ISSN:1349-6778
  • 出版年度:2011
  • 卷号:80
  • 期号:1
  • 页码:20-40
  • DOI:10.11179/ker.80.20
  • 出版社:Graduate School of Economics, Kyoto University
  • 摘要:

    Both John Maynard Keynes and Hyman Minsky emphasized the effects of long-run expectations and financial structures on investment decisions. Minsky alleged that financial booms and collapses become inevitable in market economies and developed a new theory called the “financial instability hypothesis." In this paper, we construct an optimal-investment model under conditions of imperfect competition and explicitly represent the financing of investment. Our model demonstrates the micro-foundation of the investment theory of Keynes and Minsky. We show that both a firm's expected rate of growth and bank behavior play crucial roles in determining investment. For example, when the risk premium of a bank reacts elastically to the expected growth rate of demand, fluctuations in investment increase significantly and the range of fluctuation exceeds that in a perfect capital market. This means that the bank's behavior amplifies the fluctuations of the economy.

  • 关键词:expected growth rate of demand; bank behavior; investment decisions
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