{"id":{"repo_id":"mit","oai_identifier":"oai:dspace.mit.edu:1721.1/126972"},"canonical_url":"https://search.dev.ndltd.org/etd/mit/oai:dspace.mit.edu:1721.1/126972","repository":{"repo_id":"mit","name":"MIT","base_url":"https://dspace.mit.edu/oai/request"},"display":{"title":"Rising technologies, investment and discount rates","abstract":"This paper examines the recent compositional shift in corporate capital and its impact on investment's sensitivity to funding costs. I show that the rising share of intangibles in U.S firms' assets significantly dampens the stimulus effect of interest rate shocks. For a given surprise change to the fed funds rate, a one standard deviation above the mean in intangible capital intensity mutes investment's response by more than 30%. These results hold in robust specifications, when isolating the pure interest rate effect, and controlling for other known factors such as leverage and firm growth. A number of characteristics of intangible capital can potentially explain the heterogeneous responses: collateral value, adjustment costs, project duration and de- preciation rates. I propose a structural interpretation of the empirical findings in a quantitative general equilibrium model of heterogeneous firms. Under a reasonable calibration, the model's insights indicate that the higher depreciation tax shield from intangible capital investment quantitatively plays the main role in driving the results. I present further empirical evidence for this channel by focusing on negative profit firms.","abstract_html":"This paper examines the recent compositional shift in corporate capital and its impact on investment's sensitivity to funding costs. I show that the rising share of intangibles in U.S firms' assets significantly dampens the stimulus effect of interest rate shocks. For a given surprise change to the fed funds rate, a one standard deviation above the mean in intangible capital intensity mutes investment's response by more than 30%. These results hold in robust specifications, when isolating the pure interest rate effect, and controlling for other known factors such as leverage and firm growth. A number of characteristics of intangible capital can potentially explain the heterogeneous responses: collateral value, adjustment costs, project duration and de- preciation rates. I propose a structural interpretation of the empirical findings in a quantitative general equilibrium model of heterogeneous firms. Under a reasonable calibration, the model's insights indicate that the higher depreciation tax shield from intangible capital investment quantitatively plays the main role in driving the results. I present further empirical evidence for this channel by focusing on negative profit firms.","abstract_has_math":false,"creators":["Dernaoui, Zaki."],"institution":"Massachusetts Institute of Technology","degree_name":"Master","degree_level":null,"degree_discipline":null,"degree_department":"Sloan School of Management","school":null,"contributors":[],"advisors":["David Thesmar."],"committee_chairs":[],"committee_members":[],"year":2020,"date_issued":"2020","date_published":"2020","updated_at":"2026-07-22T22:20:48Z","subjects":["Sloan School of Management."],"languages":["eng"],"rights":["MIT theses may be protected by copyright. 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I show that the rising share of intangibles in U.S firms' assets significantly dampens the stimulus effect of interest rate shocks. For a given surprise change to the fed funds rate, a one standard deviation above the mean in intangible capital intensity mutes investment's response by more than 30%. These results hold in robust specifications, when isolating the pure interest rate effect, and controlling for other known factors such as leverage and firm growth. A number of characteristics of intangible capital can potentially explain the heterogeneous responses: collateral value, adjustment costs, project duration and de- preciation rates. I propose a structural interpretation of the empirical findings in a quantitative general equilibrium model of heterogeneous firms. Under a reasonable calibration, the model's insights indicate that the higher depreciation tax shield from intangible capital investment quantitatively plays the main role in driving the results. I present further empirical evidence for this channel by focusing on negative profit firms."]},{"key":"dc:description.degree","label":"Dc Description Degree","values":["S.M. in Management Research"]},{"key":"dc:title","label":"Title","values":["Rising technologies, investment and discount rates"]}]}],"canonical_facts":{"dc:contributor.advisor":["David Thesmar."],"dc:contributor.department":["Sloan School of Management","Sloan"],"dc:contributor.other":["Sloan School of Management."],"dc:creator":["Dernaoui, Zaki."],"dc:date.accessioned":["2020-09-03T16:46:21Z"],"dc:date.available":["2020-09-03T16:46:21Z"],"dc:date.issued":["2020"],"dc:description":["Thesis: S.M. in Management Research, Massachusetts Institute of Technology, Sloan School of Management, May, 2020","Cataloged from the official PDF of thesis.","Includes bibliographical references (pages 27-29)."],"dc:description.abstract":["This paper examines the recent compositional shift in corporate capital and its impact on investment's sensitivity to funding costs. I show that the rising share of intangibles in U.S firms' assets significantly dampens the stimulus effect of interest rate shocks. For a given surprise change to the fed funds rate, a one standard deviation above the mean in intangible capital intensity mutes investment's response by more than 30%. These results hold in robust specifications, when isolating the pure interest rate effect, and controlling for other known factors such as leverage and firm growth. A number of characteristics of intangible capital can potentially explain the heterogeneous responses: collateral value, adjustment costs, project duration and de- preciation rates. I propose a structural interpretation of the empirical findings in a quantitative general equilibrium model of heterogeneous firms. Under a reasonable calibration, the model's insights indicate that the higher depreciation tax shield from intangible capital investment quantitatively plays the main role in driving the results. 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