Asset Markets and Investment Decisions*

Modeling strategic investment decisions in spatial markets

Markets for natural resources and commodities are often oligopolistic. In these markets, production capacities are key for strategic interaction between the oligopolists. We analyze how different market structures influence oligopolistic capacity investments and thereby affect supply, prices and rents in spatial natural resource markets using mathematical programing models. The models comprise ...

Long-Term Finance and Investment with Frictional Asset Markets

This paper develops a theory of investment and maturity choices and studies its implications for the macroeconomy. The novel ingredient is an explicit secondary market with trading frictions which leads to a liquidity spread which increases with maturity and generates an upward sloping yield curve. As a result, trading frictions induce firms to borrow and invest at shorter horizons than in a fr...

Learning in Investment Decisions: Evidence from Prediction Markets and Polls

Aligning Software Development Investment Decisions with the Markets

Risk, or exposure to uncertainty, is an inherent part of software development. Therefore, risk is an important factor in making investment decisions about software development. This position paper illustrates a disciplined approach to treating risk, an approach that allows software development decisions to be aligned with the capital markets. We start from the premise that uncertainty creates v...

Investment Shocks and Asset Prices ∗

I explore the implications for asset prices and macroeconomic dynamics of shocks that improve real investment opportunities and thus affect the representative household’s marginal utility. These investment shocks generate differences in risk premia due to their heterogenous impact on firms: they benefit firms producing investment relative to firms producing consumption goods, and increase the v...