Interest rates and backward-bending investment
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Author
Contributions
- National Bureau of Economic Research. - Contributor
Publication
2004 - National Bureau of Economic Research, Cambridge, Mass, Massachusetts
Language
English
Word Count
8,750 words, Guess
Page Count
35 pages
Identifiers
- OCLC Control Number54801941
- Open LibraryOL17620743M
Description
"This paper shows that interest rate reductions do not necessarily stimulate investment in an environment with uncertainty and adjustment costs. When firms making lumpy investment decisions can acquire information about profitability by delaying, aggregate investment demand is always a backward-bending function of the interest rate. An interest rate increase is more likely to stimulate investment when the potential to learn is larger and in the short run rather than the long run. The average observed profit rate is also a backward-bending function of the interest rate when firms learn over time"--National Bureau of Economic Research web site.
Subjects
Series Statement
- NBER working paper series -- no. 10354.
- Working paper series (National Bureau of Economic Research) -- working paper no. 10354.
Links
Other Editions
- Interest rates and backward-bending investment
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