These studies of the cost of capital will inspire and guide policy-makers who share the goal of making the allocation of capital in a market economy more efficient.Volume 1 presents pioneering studies of the cost of capital as a determinant of investment expenditures. The cost of capital summarizes the future consequences of investment essential for current decisions. This concept has become an indispensible tool for studying the dynamics of investment behavior. Both macroeconome tric models and intertemporal general equilibrium models have employed the cost of capital as a determinant of short- and long-term investment expenditures.