Demand for investment in productive and financial capital

Eitan Hochman*, Oded Hochman, Assaf Razin

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


The paper deals with an entrepreneur who operates in imperfect capital markets, making rational decisions about productive and financial investment. Using the economic rule that the allocation of assets between productive and financial purposes is carried out according to the equality of the marginal productivity and the marginal factor costs of debt, the paper analyses the factors which determine the size of the firm, the size of debt, and the optimal dynamic path.

Original languageEnglish
Pages (from-to)67-83
Number of pages17
JournalEuropean Economic Review
Issue number1
StatePublished - Apr 1973


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