ABSTRACT
The task is not simple for the following reason. The parameter d is defined as the aggregate value of new long-term bank advances in a period (that is new bank debt excluding the credit extended to finance current investment expenditure) divided by the aggregate value of the new capital stock entering into production at the beginning of the period. The denominator of this definition is relatively straightforward to determine empirically, but the numerator is the outcome of a large number of funding decisions by individual firms who are likely to have diverse expectations about inflation and who may have very different options in terms of access to equity markets. This situation is further complicated by the existence of specialist corporations who do not produce goods and services themselves, but who issue equities and borrow debt in order to obtain funds for purchasing the equities of existing production firms in the hope of achieving capital gains through restructuring and inflation. The existence of such' corporate raiders' has the effect of raising the economy's marginal debt-capital ratio in the aggregate, without having any direct link with the real investment expenditure decisions being made each period.
