Projects, Not Funds: Structural Room, Expected Returns and the Scale of Monetary Transmission to Investment

Secular-stagnation theories work through a falling natural rate and the lower bound. This paper offers an investment-side complement away from the bound. Its central object is structural room: the scale of expansion projects an economy can still absorb, which investment uses up and demographic and structural growth replenishes. Where projects rather than funds bind, extra internal funds at a given hurdle flow into corporate net lending rather than investment. In that regime the response of net investment to transitory easing, per unit fall in the real rate entering project hurdles, is proportional to room in output units and independent of room in logs. Across steady states the output-unit response is proportional to the growth of room, even with persistent project quality, and declines toward zero after room stops growing. Adjustment-cost q-theory implies a different pattern in both units, so the log prediction can be refuted without measuring room.