From 1998 to 2011, U.S. firms held more cash on average (but not at the median) than similar foreign firms (foreign twins) did. The average difference in cash holdings does not increase after 2008, and it is driven by highly R&D-intensive U.S. firms. Because there are almost no similarly R&D-intensive foreign firms, mean comparisons involving these U.S. firms are not reliable. Without these U.S. firms, neither U.S. multinational firms nor purely domestic U.S. firms hold more cash than their foreign twins do. Country characteristics have negligible explanatory power for differences in cash holdings between U.S. firms and their foreign twins.

T HIS paper examines the effects of debt management on aggregate expenditure during I9 53-58. The Treasury in this period lengthened the debt in recession and allowed it to shorten somewhat in prosperity (Table i), the opposite of the anti-cyclical policy advocated by some economists. Treasury policy was defended on the grounds that it did not unduly intensify recessions and that offerings of longterm securities in prosperity provided undesirable competition with new issues of private, state, and local government securities and increased interest costs.1 Debt management for purposes of this paper

i the proportion of T which is invested in the borrowing country j the proportion of T spent outside the borrowing country p = the proportion of T spent in the lending country (j>p). In the lending country the increase in income will amount to: p.T times the multiplier (allowing for foreign repercussions); (I) while the decline in the balance of payments surplus 3 will be: [T minus p * T plus MPM p T times the multiplier] minus [a secondary increase in export to the borrowing country whose income has gone up]. (2) In the borrowing country, income will rise by: i. T times the foreign trade multiplier (3) while the external deficit will decline by: [T j.T] [MPM.i.T times the foreign trade multiplier]. (4) It is evident from (2) and (4) that the transfer must exceed the foreign exchange requirements of the development program if it is to have a favorable effect on the external position of both nations. This is particularly true for the borrowing country. Provisions may also be made for spacing repayments over periods of inflation. This would reduce the external surplus in the paying country and the external deficit in the receiving country, while damping the inflation in both economies. A policy of countercyclical lending is subject to the same limitation as the use of public work programs in combatting recessions. By the time a foreign investment project gets under way the recession may be over, but work on the project cannot be stopped for the duration of the ensuing boom. (However, the two lags in the transmission of economic fluctuations from developed to underdeveloped countries would reduce some of this inflexibility.) This is another reason why the responsibility for such a policy must rest with a public body. Some useful investment projects can no doubt be found which are flexible in nature and adaptable to cyclical needs. The amount of the transfer should in any case exceed the immediate costs of these projects. Furthermore, the subject under discussion would not constitute the entire lending program, but only a small part of it. International transfers should be geared to development requirements and not to cyclical fluctuations. Nor can cycle policy be used to justify foreign lending. But inasmuch as lending programs are conducted to foster economic development, there is no reason why they should not be used in part to combat economic fluctuations and external imbalances. ing 1947-1958: Y = -0.225 + o.oo63 X 4o.II6; r= o.682. 'These adjustments are limited to the income effects and should be supplemented by changes in the terms of trade.

A dynamic model with credit under limited commitment is constructed, in which limited memory can weaken the effects of punishment for default. This creates an endogenous role for government debt in credit markets, and the economy can be non-Ricardian. Default can occur in equilibrium, and government debt essentially plays a role as collateral and thus improves borrowers' incentives. The provision of government debt acts to discourage default, whether default occurs in equilibrium or not.

Journal Article Costly Monitoring, Loan Contracts, and Equilibrium Credit Rationing Get access Stephen D. Williamson Stephen D. Williamson Queen's University and University of Western Ontario Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 102, Issue 1, February 1987, Pages 135–145, https://doi.org/10.2307/1884684 Published: 01 February 1987

[We construct a firm-level governance index that increases with minority shareholder protection. Compared with U.S. matching firms, only 12.68% of foreign firms have a higher index. The value of foreign firms falls as their index decreases relative to the index of matching U.S. firms. Our results suggest that lower country-level investor protection and other country characteristics make it suboptimal for foreign firms to invest as much in governance as U.S. firms do. Overall, we find that minority shareholders benefit from governance improvements and do so partly at the expense of controlling shareholders.]