RyD investment and financial frictions

Borradores de Economia
Número: 
828
Publicado: 
Clasificación JEL: 
O41, D86
Palabras clave: 
Moral Hazard, Endogenous Borrowing Constraints, Technological Change

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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