RyD investment and financial frictions

Borradores de Economia
Number: 
828
Published: 
Classification JEL: 
O41, D86
Keywords: 
Human capital agglomeration, Social returns, Private returns, Externalities, Uncertainty, Fiscal policy
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RyD intensity for small firms is high and persistent over time. At the same time, small firms are often financially constrained. This paper proposes a theoretical model that explains the coexistence of these two stylized facts. It is shown that self-finan