Download or read book Irreversibility Uncertainty and Private Investment written by Luis Serven and published by . This book was released on 1996 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Irreversibility Uncertainty and Investment written by Robert S. Pindyck and published by World Bank Publications. This book was released on 1989 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Irreversibility and Private Investment Decisions Under Uncertainty written by Benjamin Ayodele Folorunso and published by LAP Lambert Academic Publishing. This book was released on 2012-03 with total page 140 pages. Available in PDF, EPUB and Kindle. Book excerpt: Developing countries are in dire need of sustainable economic growth and theoretical literature suggests the resurgence of private investment as a panacea for rapid economic growth. This calls for the examination of the determinants of private investment in the literature. Recent works have, however, indicated that the lost option value of investment and effect of uncertainty can be large but empirical literature on this issue is scanty in developing countries. The book, thus, examines private investment decisions in Nigeria and provides improved understanding and more dynamic framework for private investment decisions in the wake of irreversibility and uncertainty. The book concludes that high levels of uncertainty indicators cause private investment to decline while irreversibility affects the timing of private investment spending in the short run and makes private investors less eager to invest thus impacting negative effect on investment spending. The book is relevant to academia in the context of policy discussion on the causes of Africa's dismal growth performance and offers important guidelines for designing more effective policies as regards private investment decisions.
Download or read book Irreversibility uncertainty and investment written by Robert S. Pindyck and published by . This book was released on 1990 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Real Exchange Rate Uncertainty and Private Investment in Developing Countries written by Luis Servén and published by World Bank Publications. This book was released on 2002 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Serven examines empirically the link between real exchange rate uncertainty and private investment in developing countries using a large cross country-time series data set. He builds a GARCH-based measure of real exchange rate volatility and finds that it has a strong negative impact on investment, after controlling for other standard investment determinants and taking into account their potential endogeneity. The impact of uncertainty is not uniform, however. There is some evidence of threshold effects, so that uncertainty only matters when it exceeds some critical level. In addition, the negative impact of real exchange rate uncertainty on investment is significantly larger in economies that are highly open and in those with less developed financial systems.
Download or read book Irreversibility Uncertainty and Cyclical Investment written by Ben Bernanke and published by . This book was released on 1980 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: The optimal timing of real investment is studied under the assumptions that investment is irreversible and that new information about returns is arriving over time. Investment should be undertaken in this case only when the costs of deferring the project exceed the expected value of information gained by waiting. Uncertainty, because it increases the value of waiting for new information, retards the current rate of investment. The nature of investor's optimal reactions to events whose implications are resolved over time is a possible explanation of the instability of aggregate investment over the business cycle
Download or read book Uncertainty Instability and Irreversible Investment written by Luis Serven and published by . This book was released on 1997 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Investment Uncertainty and Irreversibility in Ghana written by Ms.Catherine A. Pattillo and published by International Monetary Fund. This book was released on 1997-12-01 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Public Capital and Private Investment a Real Option Approach written by Bruno de Oliveira Cruz and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we extend the usual models of irreversible investment under uncertainty by introducing the stock of public capital as an input for the private sector. Public investment takes place in a stochastic environment. Public capital then increases the productivity of private capital which is assumed to be fully irreversible. In our model, the government has an intertemporal budget constraint, i.e. taxes are collected each period to fund the public debt. We provide a partial equilibrium analysis, as it is standard in models of irreversible investment under uncertainty. Even under uncertainty, the optimal tax rate is then constant and does not depend on the size of uncertainty, it is exactly the same as the one that would prevail in a deterministic world. We show that the government has an insurance role since it removes part of the uncertainty faced by the firm.
Download or read book Irreversibility and Aggregate Investment written by Giuseppe Bertola and published by . This book was released on 1991 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Investment Under Uncertainty and Irreversibility written by Fanny Saul Demers and published by . This book was released on 1993 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Macroeconomic Uncertainty and Private Investment in LDCs written by Luis Serven and published by . This book was released on 1998 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Effects of Macroeconomic Uncertainty on Irreversible Investment written by Ayse E. Sile and published by . This book was released on 2003 with total page 234 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Impact of Market Structure and Irreversibility on Investment Under Uncertainty written by Sara Maioli and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Risk Aversion Price Uncertainty and Irreversibility of Investments written by Rob W. J. van den Goorbergh and published by . This book was released on 2002 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper generalizes the theory of irreversible investment under uncertainty by allowing for risk averse investors in the absence of complete markets. Until now this theory has only been developed in the cases of risk neutrality, or risk aversion in combination with complete markets. We introduce the class of logistic absolute risk aversion (LARA) utility functions to examine the effects of risk aversion, investment size, and other parameters on the optimal investment decision. We find that risk aversion reduces investment, particularly if the investment size is large. Moreover, we find that a rise in uncertainty increases the value of deferring irreversible investments. This effect is stronger for high levels of risk aversion. In addition, we provide, to the best of our knowlegde for the first time, analytical comparative statics formulas for the risk neutral investor.
Download or read book Irreversible Investment with Uncertainty and Scale Economies written by Avinash Dixit and published by . This book was released on 2008 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyses optimal irreversible investment policy when profits are subject to a multiplicative geometric Brownian motion shock. The marginal product of capital is increasing initially and decreasing thereafter. In the latter range, optimal policy is familiar: capacity is added gradually as the shock rises to a threshold where the expected return on the marginal unit is a required multiple of the cost of capital. The multiple reflects the option value of waiting. The optimal policy in the increasing marginal product range obeys the same multiple, now applied to the total return on the discrete increase in capital. Implications for economic growth, and suboptimal equilibria under external economies, are examined.
Download or read book Investment Under Uncertainty and Irreversibility written by Fanny Demers and published by . This book was released on 1993 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt:
