TY  - JOUR
AU  - Razin,Assaf
AU  - Sadka,Efraim
AU  - Yuen,Chi-Wa
TI  - Do Debt Flows Crowd Out Equity Flows Or the Other Way Round?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7736
PY  - 2000
Y2  - June 2000
UR  - http://www.nber.org/papers/w7736
L1  - http://www.nber.org/papers/w7736.pdf
N1  - Author contact info:
Assaf Razin
Department of Economics
Cornell University
Uris 422
Ithaca, NY 14853
Tel: 607/255-9625
Fax: 607/255-2818
E-Mail: ar256@cornell.edu

Efraim Sadka
Tel Aviv University
Eitan Berglas School of Economics
P.O.B. 39040
Ramat Aviv, Tel Aviv, 69978, ISRAEL
E-Mail: sadka@post.tau.ac.il

Chi-wa Yuen
University of Hong Kong
E-Mail: cwyuen@ust.hk
AB  - In the presence of asymmetric information, the stage at which financing decisions are made about investment projects in a small open economy is crucial for the composition of international capital inflows as well as for the efficiency of channeling savings into investment.  This paper compares the implications of two extreme cases regarding the information possessed by the firms at their financing stage for whether inflows of foreign debt may crowd out foreign equity or the other way round.  The scope for corrective tax policies is examined.  We also provide a welfare comparison between the two mechanisms of capital flows.
ER  -