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Irreversibility And Aggregate Investment

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Irreversibility And Aggregate Investment

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Author : Giuseppe Bertola
language : en
Publisher:
Release Date : 2022

Irreversibility And Aggregate Investment written by Giuseppe Bertola and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.

Investment is often irreversible, in that installed capital has little or no value unless used in production. In the presence of ongoing uncertainty, an individual firm's irreversible investment policy optimally alternates short bursts of positive gross investment to periods of inaction, when the installed capital stock is allowed to depreciate. The behavior of aggregate investment series is characterized by sluggish, continuous adjustment instead. We argue in this paper that aggregate dynamics should be interpreted in terms of unsynchronized irreversible investment decisions by heterogenous firms, rather than in terms of ad-hoc adjustment cost functions in a representative-agent framework. We propose a closed-form solution for a realistic model of sequential irreversible investment, characterize the aggregate implications of microeconomic irreversibility and idiosyncratic uncertainty, and interpret U.S. data in light of the theoretical results.

Irreversibility And Aggregate Investment

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Author : Giuseppe Bertola
language : en
Publisher:
Release Date : 1991

Investment Under Uncertainty

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Author : Avinash K. Dixit
language : en
Publisher: Princeton University Press
Release Date : 1994

Investment Under Uncertainty written by Avinash K. Dixit and has been published by Princeton University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 1994 with Business & Economics categories.

How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment failed to explain the behavior of investment spending in the United States and other countries? In this book, Avinash Dixit and Robert Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made. In so doing, they answer important questions about investment decisions and the behavior of investment spending. This new approach to investment recognizes the option value of waiting for better (but never complete) information. It exploits an analogy with the theory of options in financial markets, which permits a much richer dynamic framework than was possible with the traditional theory of investment. The authors present the new theory in a clear and systematic way, and consolidate, synthesize, and extend the various strands of research that have come out of the theory. Their book shows the importance of the theory for understanding investment behavior of firms; develops the implications of this theory for industry dynamics and for government policy concerning investment; and shows how the theory can be applied to specific industries and to a wide variety of business problems.

Irreversibility Uncertainty And Investment

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Author : Robert S. Pindyck
language : en
Publisher: World Bank Publications
Release Date : 1989

Irreversibility Uncertainty And Investment written by Robert S. Pindyck and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1989 with Capital investments categories.

Irreversible investment is especially sensitive to such risk factors as volatile exchange rates and uncertainty about tariff structures and future cash flows. If the goal of macroeconomic policy is to stimulate investment, stability and credibility may be more important than tax incentives or interest rates.

Fiscal Financing And Investment Irreversibility

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Author : Matteo Ghilardi
language : en
Publisher: International Monetary Fund
Release Date : 2025-05-02

Fiscal Financing And Investment Irreversibility written by Matteo Ghilardi and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2025-05-02 with categories.

We examine the macroeconomic, asset pricing, and public debt consequences of deficit financing dividend taxation in a dynamic general equilibrium model featuring partial investment irreversibility. Dividend taxes interact directly with the occasionally-binding irreversibility constraint, generating tax-augmented user-cost and hangover channels that both shape investment and debt-to-output fluctuations and account for a sizeable share of their long-run volatilities. Our analysis further reveals that debt-offsetting dividend tax hikes initially trigger investment inactivity through higher user-costs, followed by a surge driven by intertemporal tax arbitrage and hangover effects. Finally, debt-driven dividend tax rules amplify asset price fluctuations while delivering only modest fiscal revenue changes.

Investment

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Author : Michelle Baddeley
language : en
Publisher: Bloomsbury Publishing
Release Date : 2017-05-09

Investment written by Michelle Baddeley and has been published by Bloomsbury Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-05-09 with Business & Economics categories.

Investment provides an examination of the key macroeconomic theories which underpin fixed asset investment. It would make ideal reading for an intermediate level macroeconomics course or a module on fixed asset investment taking an applied macroeconomic perspective.

Real Options And Investment Under Uncertainty

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Author : Eduardo S. Schwartz
language : en
Publisher: MIT Press
Release Date : 2004

Real Options And Investment Under Uncertainty written by Eduardo S. Schwartz and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Business & Economics categories.

The study of investment under uncertainty was stagnant for several decades until developments in real options revitalized the field. The topics covered in this book include the reasons behind the under-investment programme.

Adjustment Costs Irreversibility And Investment Patterns In African Manufacturing

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Author : Mr.Arne Bigsten
language : en
Publisher: International Monetary Fund
Release Date : 1999-07-01

Adjustment Costs Irreversibility And Investment Patterns In African Manufacturing written by Mr.Arne Bigsten and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999-07-01 with Business & Economics categories.

This paper examines dynamic patterns of investment in Cameroon, Ghana, Kenya, Zambia and Zimbabwe, assessing the consistency of those patterns with different adjustment cost structures. Using survey data on manufactured firms, we document the importance of zero investment episodes and lumpy investment. The proportion of firms experiencing large investment spikes is significant in explaining aggregate manufacturing investment. Taken together, evidence from descriptive statistics, average investment regressions modeling the response to capital imbalance, and transition data analysis indicate that irreversibility is an important factor considered by firms when making investment plans. The picture is not unanimous however, and some explanations for the mixed results are proposed.

Nber Macroeconomics Annual 1993

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Author : Olivier Blanchard
language : en
Publisher: MIT Press
Release Date : 1993

Nber Macroeconomics Annual 1993 written by Olivier Blanchard and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993 with Business & Economics categories.

This annual is designed to stimulate research on problems in applied economics, to bring frontier theoretical developments to a wider audience, and to accelerate the interaction between analytical and empirical research in macroeconomics

Aggregate Investment

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Author : Ricardo J. Caballero
language : en
Publisher:
Release Date : 1997

Aggregate Investment written by Ricardo J. Caballero and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1997 with Capital investments categories.

The 90s have witnessed a revival in economists' interest and hope of explaining" aggregate and microeconomic investment behavior. New theories, better econometric" procedures, and more detailed panel data sets are behind this movement. Much of the progress" has occurred at the level of microeconomic theories and evidence; however aggregation and general equilibrium aspects of the investment problem also has been significant." The concept of sunk costs is at the center of modern theories. The implications of these costs for" investment go well beyond the neoclassical response to the irreversible-technological friction" they represent, for they can also lead to first order inefficiencies when interacting with" informational and contractual problems

Irreversibility And Aggregate Investment

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