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Unpublished Paper
Optimal capital stock and financing constraints (2011)
  • Giuseppe Travaglini, Prof.

In this paper we show that financing constraints affect the optimal level of capital stock even when the financing constraint is ineffective. This happens when the firm rationally anticipates that access to external financing resources may be rationed in the future. We will show that with these expectations, the optimal investment policy is to invest less in any given period, thereby lowering the desired optimal capital stock in the long run.

  • Investment; capital stock; constraints; uncertainty
Publication Date
Fall November, 2011
Citation Information
Giuseppe Travaglini. "Optimal capital stock and financing constraints" (2011)
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