Irreversibility, Uncertainty, and Cyclical Investment
نویسندگان
چکیده
منابع مشابه
Cyclical Uncertainty and Physical Investment Decisions
The paper studies the interaction between cyclical uncertainty and investment in a stochastic real option framework where demand shifts stochastically between two different states, each with different rates of drift and volatility. In our setting the shifts are governed by a two-state Markov switching model with constant transition probabilities. The magnitude of the link between cyclical uncer...
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This paper studies the effect of interest rates on investment in an environment where firms make irreversible investments with uncertain pay-offs. In this setting, changes in the interest rate affect both the cost of capital and the cost of delaying investment to acquire information. These two forces combine to generate an aggregate investment demand curve that is a backward-bending function of...
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Panel data on Ghanaian manufacturing firms are used to test predictions from models of irreversible investment under uncertainty. Information on the entrepreneur’s subjective probability distribution over future demand for the firm’s products is used to construct the expected variance of demand, which is used as a measure of uncertainty. Empirical results support the prediction that firms wait ...
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ژورنال
عنوان ژورنال: The Quarterly Journal of Economics
سال: 1983
ISSN: 0033-5533
DOI: 10.2307/1885568