Journal of Monetary Economics 2014 DOI: 10.1016/j.jmoneco.2014.04.003 View full text
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Mitsuru Katagiri

Abstract: In this paper, I investigate the cross-sectional determinants of corporate capital structure using a general equilibrium model with endogenous firm dynamics, a realistic tax environment, and financial frictions. I find that the equilibrium firm distribution in the model replicates fairly well the distribution of corporate capital structure as well as the relationship between capital structure, profitability, and firm size in the data. The key mechanisms here are economies of scale and two types of productivity…

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