This paper develops a predator-prey model to explain cycles in credit-led economies. The predator is the part of the financial sector that issues credit money for non-output transactions. It increases the indebtedness ratio and inflates bubbles that eventually have a negative impact on the real rate of growth (the prey). From this basis, we build a couple of models that may lead to self-contained or explosive cycles. Even in the first case, there is a risk of a financial collapse when certain variables move far away from their longterm equilibrium positions. In order to tame the cycle and avoid extreme positions, governments should ban the expansion of credit money for the purchase of assets and introduce permanent checks to risky credit.

The negative impact of judicial inefficiency on investment decisions has been examined theoretically, supported by aggregate empirical studies at the country level. Whether this effect is observed at the firm level, however -and under what circumstances and through what channels it occurs- has yet to be determined. This paper fills the gap by analyzing the problem empirically for the period 2002–2016 using information from 650,000 firms (3.5 million observations). Our approach is novel, because it shows that the impact is greater in large companies than small ones, that it occurs more strongly in industrial companies, and that the civil (private) jurisdiction is the crucial one in achieving efficiency improvements. These findings are important for aggregate productivity growth.

The aim of this paper is to investigate the effect of economic policy uncertainty on firms’ investment decisions. We focus on Spain for the period 1998–2014. To measure policy-related uncertainty, we borrow the economic policy uncertainty (EPU) indicator available for this country. We find strong evidence that uncertainty reduces corporate investment. This relationship appears to be nonlinear, being the marginal effect of uncertainty attenuated toward zero during periods of high uncertainty levels. Furthermore, the heterogeneous results suggest that the adverse effect of uncertainty is particularly relevant for highly vulnerable firms. Overall, these results are consistent with the hypotheses that economic policy-related uncertainty reduces corporate investment through increases in precautionary savings or to worsening of credit conditions.

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