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Article: Cost of capital for industry and banks.
- Article from:
- Business Economics
- Article date:
- April 1, 1991
- Author:
CopyrightCOPYRIGHT 1991 The National Association for Business Economists. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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*Robert N. McCauley is Research Officer and Senior Economist, International Finance Department, and Steven A. Zimmer is Senior Economist, International Capital Markets staff, Federal Reserve Bank of New York.
1 See footnote at end of text.
A relatively high cost of capital burdens U.S. industry and banks alike. The effects of high capital costs on capital formation in the United States are hard to demonstrate, but are believed to be important, especially in research-intensive high technology industries. The inflow of foreign direct investment into the United States in the late 1970s and the 1980s fits with a cost-of-capital interpretation. ...