The U.S. economy has been running at less than full throttle for much of the past two decades, several recent studies show. That means corporations invested a smaller percentage of their profits into expanding production.
The result, according to some economists, has been slower growth during most of the past 20 years, when the gross domestic product has grown an average 2.2% a year, compared with 3.2% during the preceding 20 years.
Some analysts have blamed the shortfalls on lack of good investment opportunities. But in new research, two assistant professors of finance at Texas McCombs offer an alternative explanation. Companies are getting too big — and their size gives them incentives to sit on their money rather than put it to work.
