In this paper I analyze the impact of increasing government infrastructure investment by using existing large foreign exchange reserves in a fully optimizing model matching the Chinese economy. Even though the private investment falls in the nontradable sector, real expenditure and money balance decrease in the short run, the infrastructure investment greately enhances the efficiency and produc...

In the standard bond-pricing framework (e.g., Merton [1974]), the return function of holders of risky corporate debt is a concave function of the firm’s stochastic return, implying that a mean-preserving spread is associated with an increase in the bond risk premium. This feature of the standard debt contract has two important implications for the relationship between uncertainty and investment...

Dr. Ming Yang is an energy and environment economist in the IEA, and Dr. William Blyth is a consultant. The views expressed in this Working Paper are those of the authors and do not necessarily represent the views or policy of the International Energy Agency or of its individual member countries. As this paper is a Work in Progress, designed to elicit comments and further debate, comments are w...

— This paper examines the role of financial sector policies in determining private investment in the economies of India and Malaysia. The results suggest that significant directed credit programs favoring certain priority sectors tend to discourage private capital formation in both countries. Interest rate controls appear to have a positive impact on private investment, with the effect being mo...

This paper examines the role of financial sector policies in determining private investment in the economies of India and Malaysia. The results suggest that the presence of significant directed credit programs favoring certain priority sectors in the economies appear to be harmful for private capital formation in both countries. Interest rate controls seem to have a positive impact on investmen...