Federal Reserve Bank of St. Louis: 'The Cost of Capital and Misallocation in the United States'
June 24, 2025
June 24, 2025
ST. LOUIS, Missouri, June 24 (TNSLrpt) -- A study published on June 10, 2025 from economists at the Federal Reserve Bank of St. Louis and the University of Notre Dame introduces a novel method to measure the cost of capital for U.S. firms, revealing surprisingly modest levels of capital misallocation under normal conditions. However, the research also highlights a significant increase in this inefficiency during the 2020-2021 period, primarily driven by the underpricing of riskier loans.
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