Interest rates, irreversibility, and backward-bending investment

• 成果类型: Article
• 署名作者: Chetty, Raj
• 署名单位: University of California System; University of California Berkeley; National Bureau of Economic Research
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1111/j.1467-937X.2007.00414.x
• 发表日期: 2007
• 页码: 67-91
• 关键词: uncertainty; adjustment

摘要

This paper studies the effect of interest rates on investment in an environment where firms make irreversible investments with uncertain pay-offs. In this setting, changes in the interest rate affect both the cost of capital and the cost of delaying investment to acquire information. These two forces combine to generate an aggregate investment demand curve that is a backward-bending function of the interest rate. At low rates, increasing the interest rate raises investment by increasing the cost of delay.