Topic
Capital deepening
About: Capital deepening is a research topic. Over the lifetime, 5203 publications have been published within this topic receiving 230297 citations.
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TL;DR: In this article, the authors consider the implications of an inflow of capital from abroad for a small tariff-imposing country, within the standard two-commodity two-factor model of international trade.
515 citations
TL;DR: In this article, the authors proposed a micro-foundation for social increasing returns in human capital accumulation, which is a pecuniary externality due to the interaction of ex ante investments and costly bilateral search in the labor market.
Abstract: This paper proposes a microfoundation for social increasing returns in human capital accumulation. The underlying mechanism is a pecuniary externality due to the interaction of ex ante investments and costly bilateral search in the labor market. It is shown that the equilibrium rate of return on the human capital of a worker is increasing in the average human capital of the workforce even though all the production functions in the economy exhibit constant returns to scale, there are no technological externalities, and all workers are competing for the same jobs.
506 citations
TL;DR: In this article, the authors present evidence that capital controls influence the composition of flows, not their volume, while sterilized intervention influences volume and composition, skewing flows to short maturities.
498 citations
TL;DR: In this article, the authors present a model of nonbalanced growth based on differences in factor proportions and capital deepening, which is consistent with an asymptotic equilibrium with a constant interest rate and capital share in national income.
Abstract: We present a model of nonbalanced growth based on differences in factor proportions and capital deepening. Capital deepening increases the relative output of the more capital‐intensive sector but simultaneously induces a reallocation of capital and labor away from that sector. Using a two‐sector general equilibrium model, we show that nonbalanced growth is consistent with an asymptotic equilibrium with a constant interest rate and capital share in national income. For plausible parameter values, the model generates dynamics consistent with U.S. data, in particular, faster growth of employment and slower growth of output in less capital‐intensive sectors, and aggregate behavior consistent with the Kaldor facts.
496 citations
TL;DR: In this article, the authors examined whether cross-listing in the U.S. reduces foreign firms' costs of capital and found that firms with crosslistings on U. S. exchanges experienced a significant decrease in their cost of capital between 70 to 120 basis points.
Abstract: This paper examines whether cross-listing in the U.S. reduces foreign firms' costs of capital. While prior studies show that U.S. cross-listings are associated with substantial increases in firm value, the sources of these valuation effects are not well understood. We estimate cost of capital effects implied by market prices and analyst forecasts, which accounts for changes in growth expectations around cross-listings. We find strong evidence that firms with cross-listings on U.S. exchanges experience a significant decrease in their cost of capital between 70 to 120 basis points. These effects are sustained and still present after the passage of the Sarbanes-Oxley Act. Consistent with the bonding hypothesis, we find smaller cost of capital reductions for firms that cross-list in the over-the-counter market and for exchange-listed firms from countries with stronger home-country institutions. For exchange-traded cross-listings, the reduction in cost of capital accounts for more than half of the increase in value around cross-listings, whereas for the other types of cross-listings the valuation effects are primarily attributable to contemporaneous revisions in growth expectations.
481 citations