The same arbitrage rationale is used to show that the possibility of constructing homemade dividends on the personal account may be fulfilled by firms, which ensures the same irrelevance result
. This second bloc is at odds with the classical finance's view of Gordon-Shapiro asserting the value-enhancing effect of dividend policy on stock prices.
3.1 A simple irrelevance result for cooperation and commitment
The key contribution of Chari and Kehoe (2002) is to show that generically the broad irrelevance result of Proposition 5 disappears if one relaxes at least one of the two assumptions A1 or A2.
The model of Chari and Kehoe (2002) leads to conclusions which are in spirit very different from the irrelevance result of Proposition 5.
all players always attain their target values and U = [V.sub.i] = 0, [[nabla].sub.i]), leading to a broad irrelevance result of cooperation and commitment which, in fact, covers also mixed coalitions between private agents and policymakers.
In sum, it is easy to see that, by adding two additional instruments in the spirit of Dixit and Lambertini, Proposition 4 applies within the augmented framework, leading to a broad irrelevance result of coalitions structures and commitment patterns among international policymakers, covering both monetary and fiscal policymakers.
(30) However, as a special case within this representation, it is straightforward to establish the benchmark irrelevance result of monetary policy cooperation obtained by Obstfeld and Rogoff if one abstracts from sector-specific shocks and imposes instead that there only exist two country-specific shocks, i.e.
It is ironic that this leverage irrelevance result is what many may want to remember from Merton Miller.
Rather, what justifies focusing on the leverage irrelevance result is that it describes "the central tendency around which observations scatter" (Modigliani and Miller (1958), p.281).
This analysis shows that the so-called "irrelevance results
" obtained in recent numerical studies of fixed-cost models are not parametric special cases but instead are fundamental properties of investment in long-lived capital.