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Author Perez, Ander ♦ Cunat, Vicente ♦ Haan, Wouter Den ♦ Faure, Antoine ♦ Inderst, Roman ♦ Minetti, Raoul ♦ Michaelides, Alex ♦ Webb, David C. ♦ Young, Alwyn ♦ Pino, Rafael Del
Source CiteSeerX
Content type Text
File Format PDF
Subject Domain (in DDC) Computer science, information & general works ♦ Data processing & computer science
Subject Keyword Econometric Society ♦ Computational Economics Meeting ♦ Macroeconomic Implication ♦ Rm-level Composition ♦ Calibrated Model ♦ Future Borrowing Constraint ♦ Macroeconomic Shock ♦ Ect Rmscurrent Action ♦ Future Credit Constraint ♦ Capital Reallocation ♦ Rmsprecautionary Real Invest-ment Behavior ♦ Powerful Am-pli Cation Channel ♦ Low Return Investment ♦ Signi Cant ♦ Cross-sectional Heterogeneity ♦ Business Cycle Pattern ♦ Nancial Friction ♦ Real Investment ♦ Paper Study
Abstract This paper studies the macroeconomic implications of rmsprecautionary real invest-ment behavior in response to the anticipation of future nancing constraints. Firms increase their demand for liquid and safe but low return investments in anticipation of future borrowing constraints, and this is shown to be at the source of a powerful am-pli cation channel of macroeconomic shocks. I show in a calibrated model that this mechanism is quantitatively signi cant, and that it explains business cycle patterns of aggregate and rm-level composition of real investment, of capital reallocation, and of cross-sectional heterogeneity, which are at odds with the existing models studying the macroeconomic implications of nancial frictions in rms in which expectations of future credit constraints do not a¤ect rmscurrent actions.
Educational Role Student ♦ Teacher
Age Range above 22 year
Educational Use Research
Education Level UG and PG ♦ Career/Technical Study
Publisher Date 2007-01-01