according to indebtness, credit constraint and the expected growth rate of physical capital. Under high rate of growth …. Thus the credit constraint cannot be got round. When reached, a drop in investment leads to a decrease of expected demand … inefficient, the credit constraint is final, and cannot be circumvented by new share issues. Rational expectations reveal the …

to the budget constraint Z T 1 0 c t dt = −A 1 + Y 1 (1−τ r −τ u ) and, if present, the credit constraint, A 1 ≥−φ. The … asset holdings, A 1 . To solve the problem with the credit constraint, we have to solve simultaneously the asset allocation … credit constraint We consider optimal choices after displacement first for the case with no credit constraint and in the next …