The Effects Of Irreversibility And Uncertainty On Capital Accumulation
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The Effects Of Irreversibility And Uncertainty On Capital Accumulation
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Author : Andrew B. Abel
language : en
Publisher:
Release Date : 1995
The Effects Of Irreversibility And Uncertainty On Capital Accumulation written by Andrew B. Abel and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1995 with Capital categories.
When investment decisions cannot be reversed and returns to capital are uncertain, the firm faces a higher user cost of capital than if it could reverse its decisions. This higher user cost tends to reduce the firm's capital stock. Opposing this effect is the irreversibility constraint itself: when the constraint binds, the firm would like to sell capital but cannot. This effect tends to increase the firm's capital stock. We show that a firm with irreversible investment may have a higher or a lower expected capital stock, even in the long run, compared to an otherwise identical firm with reversible investment. Furthermore, an increase in uncertainty can either increase or decrease the expected long-run capital stock under irreversibility relative to that under reversibility. However, changes in the expected growth rate of demand, the interest rate, the capital share in output, and the price elasticity of demand all have unambiguous effects.
The Effects Of Irreversibility And Uncertainty On Capital Accumulation
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Author :
language : en
Publisher:
Release Date : 1995
The Effects Of Irreversibility And Uncertainty On Capital Accumulation written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1995 with categories.
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.
The Effects Of Irreversebility And Uncertainty On Capital Accumulation
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Author : Andrew B. Abel
language : en
Publisher:
Release Date : 1995
The Effects Of Irreversebility And Uncertainty On Capital Accumulation written by Andrew B. Abel and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1995 with categories.
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.
Investment And Uncertainty
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Author : Mikael Carlsson
language : en
Publisher:
Release Date : 2008
Investment And Uncertainty written by Mikael Carlsson and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
This paper provides empirical evidence on the dynamic effects of uncertainty on firm-level capital accumulation. A novelty in this paper is that the firm-level uncertainty indicator is motivated and derived from a theoretical model, the neoclassical investment model with time to build. This model also serves as the base for the empirical work, where an error-correction approach is employed. I find a negative effect of uncertainty on capital accumulation, both in the short run and the long run. This outcome cannot be explained by the model alone. Instead, the results suggest that the predominant mechanism at work stems from irreversibility constraints.
Investment Capital Market Imperfections And Uncertainty
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Author : Robert Lensink
language : en
Publisher: Edward Elgar Publishing
Release Date : 2001-01-01
Investment Capital Market Imperfections And Uncertainty written by Robert Lensink and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001-01-01 with Business & Economics categories.
This book presents an up-to-date overview of the theory as well as the empirics of the relationship between investment, financial imperfections and uncertainty. After reviewing the capital market imperfections literature and the empirical results, the authors discuss both traditional investment models with uncertainty and the more modern option based models. They present an overview of empirical results of the modelling of investment under uncertainty. In these examples the effects of capital market imperfections on investment are carefully considered. The authors conclude that there is overwhelming empirical support for a negative uncertainty-investment relationship. This book should appeal to academics with an interest in investment theory, professionals in the financial sector and students of macroeconomics and finance. "Investment, Capital Market Imperfections, and Uncertainty" assumes only a basic knowledge of mathematics and is easily accessible.
Irreversible Decisions Under Uncertainty
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Author : Svetlana Boyarchenko
language : en
Publisher: Springer Science & Business Media
Release Date : 2007-08-26
Irreversible Decisions Under Uncertainty written by Svetlana Boyarchenko and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007-08-26 with Business & Economics categories.
Here, two highly experienced authors present an alternative approach to optimal stopping problems. The basic ideas and techniques of the approach can be explained much simpler than the standard methods in the literature on optimal stopping problems. The monograph will teach the reader to apply the technique to many problems in economics and finance, including new ones. From the technical point of view, the method can be characterized as option pricing via the Wiener-Hopf factorization.
Uncertainty Investment And Capital Accumulation
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Author : Guiying Wu
language : en
Publisher:
Release Date : 2009
Uncertainty Investment And Capital Accumulation written by Guiying Wu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with Investments categories.
Investment Uncertainty And Irreversibility In Ghana
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Author : Ms.Catherine A. Pattillo
language : en
Publisher: International Monetary Fund
Release Date : 1997-12-01
Investment Uncertainty And Irreversibility In Ghana written by Ms.Catherine A. Pattillo 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 1997-12-01 with Business & Economics categories.
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 to invest until the marginal revenue product of capital reaches a firm-specific hurdle level. Moreover, higher uncertainty raises the hurdle level that triggers investment, and uncertainty has a negative effect on investment levels that is greater for firms with more irreversible investment.