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Investment facing Credit Rationing

Author

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  • Jean-Bernard Chatelain

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

The explicit expression of investment facing credit rationing and convex adjustment costs is derived. Three implications follow. First, the assumption of convex adjustment costs can be substituted by credit rationing to derive an investment function. Second, it explains how credit rationing acts as a 'financial brake' at the bottom of a slump, when investment demand is high and collateral is low. Third, it allows the explicit Lagrange multiplier related to credit rationing to be derived and misspecification in recent empirical work to be checked.

Suggested Citation

  • Jean-Bernard Chatelain, 1998. "Investment facing Credit Rationing," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00432132, HAL.
    • Handle: RePEc:hal:cesptp:halshs-00432132
    DOI: 10.1111/1467-9957.66.s.6
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    Citations

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    Cited by:

    1. Jean‐Bernard Chatelain, 2010. "The Profit–Investment–Unemployment Nexus And Capacity Utilization In A Stock‐Flow Consistent Model," Metroeconomica, Wiley Blackwell, vol. 61(3), pages 454-472, July.
    2. Chatelain, Jean-Bernard & Teurlai, Jean-Christophe, 2001. "Pitfalls in investment Euler equations," Economic Modelling, Elsevier, vol. 18(2), pages 159-179, April.
    3. Saltari, Enrico & Travaglini, Giuseppe, 2006. "The effects of future financing constraints on capital accumulation: Some new results on the constrained investment problem," Research in Economics, Elsevier, vol. 60(2), pages 85-96, June.
    4. Jean-Bernard Chatelain, 2003. "Structural modelling of financial constraints on investment: where do we stand?," Chapters, in: Paul Butzen & Catherine Fuss (ed.), Firms’ Investment and Finance Decisions, chapter 2, pages 40-58, Edward Elgar Publishing.
    5. Kirchesch, Kai, 2004. "Financial Risks, Bankruptcy Probabilities, and the Investment Behaviour of Enterprises," HWWA Discussion Papers 299, Hamburg Institute of International Economics (HWWA).
    6. Jean-Christophe Teurlai, 2003. "Investissement corporel et coût du financement externe : identification de différents régimes et rôle du crédit-bail," Économie et Prévision, Programme National Persée, vol. 157(1), pages 51-70.
    7. Jean-Bernard Chatelain, 2002. "Structural modelling of investment and financial constraints: Where do we stand?," Working Paper Research 28, National Bank of Belgium.
    8. Kirchesch, Kai, 2004. "Financial Risks, Bankruptcy Probabilities, and the Investment Behaviour of Enterprises," Discussion Paper Series 26185, Hamburg Institute of International Economics.

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