Download or read book The Effect of Macroeconomic Uncertainty on Firm Decisions written by Saten Kumar and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a new survey of firms in New Zealand, we document how exogenous variation in the macroeconomic uncertainty perceived by firms affects their economic decisions. We use randomized information treatments that provide different types of information about the first and/or second moments of future economic growth to generate exogenous changes in the perceived macroeconomic uncertainty of some firms. The effects on their decisions relative to their initial plans as well as relative to an untreated control group are measured in a follow-up survey six months later. We find that as firms become more uncertain, they reduce their prices, employment, and investment, their sales decline, and they become less likely to invest in new technologies or open new facilities. These ex-post effects of uncertainty are similar to how firms say they would respond to higher uncertainty when asked hypothetical questions.

Download or read book Corporate Decision Making with Macroeconomic Uncertainty written by Lars Oxelheim and published by Oxford University Press. This book was released on 2008-09-26 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: Macroeconomic turbulence and volatility in financial markets can fatally affect firm's performance. Very few firms make serious attempts to inform market participants and other outsider stakeholders about the impact of macroeconomic fluctuations--manifested as changes in exchange rates, interest rates, inflation rates and stock market returns-- on performance. These stakeholders, as well as financial analysts, must make their own assessments but they generally lack both the required tools and the information to do so. Worse, top management in most firms do not themselves possess the tools to identify whether a change in performance represents a change in the firm's intrinsic competitiveness or a reflection of macroeconomic conditions outside their influence. Corporate Decision-Making with Macroeconomic Uncertainty: Performance and Risk Management develops and presents in an easily comprehensible way the essential elements of a corporate strategy for managing uncertainty in the macroeconomic environment. This Macroeconomic Uncertainty Strategy, or MUST, enhances firm value by allowing management and external stakeholders to become better informed about the development of corporate competitiveness in a turbulent macroeconomic environment. The MUST also provides guidelines for how to develop a successful risk management program. This research based book includes methods to identify the impact of macroeconomic fluctuations on cash flows and value, to develop strategies for macroeconomic risk management, to provide informative reports to external stakeholders, to evaluate the relative performance of subsidiaries and business units in multinational companies, and to evaluate performance for purposes of setting executive compensation and of fulfilling the due diligence requirements in an M & A context. The authors' use of value-based management, various performance measurements, the concept of real options, and risk management from the perspective of shareholder wealth maximization, makes the book rich and compelling. They address researchers and students in the field of international business, finance and corporate governance. On the business side, executives with strategic responsibilities, chief financial officers, and bankers who analyze corporate performance and give advice on risk management will benefit from reading this book.

Download or read book The Impact of Business Confidence and Macroeconomic Uncertainty on Firms Investment Behaviour in Argentina During the 1990s written by Valeria Arza and published by . This book was released on 2006 with total page 622 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Inflation Expectations written by Peter J. N. Sinclair and published by Routledge. This book was released on 2009-12-16 with total page 402 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inflation is regarded by the many as a menace that damages business and can only make life worse for households. Keeping it low depends critically on ensuring that firms and workers expect it to be low. So expectations of inflation are a key influence on national economic welfare. This collection pulls together a galaxy of world experts (including Roy Batchelor, Richard Curtin and Staffan Linden) on inflation expectations to debate different aspects of the issues involved. The main focus of the volume is on likely inflation developments. A number of factors have led practitioners and academic observers of monetary policy to place increasing emphasis recently on inflation expectations. One is the spread of inflation targeting, invented in New Zealand over 15 years ago, but now encompassing many important economies including Brazil, Canada, Israel and Great Britain. Even more significantly, the European Central Bank, the Bank of Japan and the United States Federal Bank are the leading members of another group of monetary institutions all considering or implementing moves in the same direction. A second is the large reduction in actual inflation that has been observed in most countries over the past decade or so. These considerations underscore the critical – and largely underrecognized - importance of inflation expectations. They emphasize the importance of the issues, and the great need for a volume that offers a clear, systematic treatment of them. This book, under the steely editorship of Peter Sinclair, should prove very important for policy makers and monetary economists alike.

Download or read book Essays in Macroeconomics and Finance written by Congyan Tan and published by . This book was released on 2011 with total page 129 pages. Available in PDF, EPUB and Kindle. Book excerpt: For the past two decades, economists have focused intensive effort on building Macroeconomics on a firm Microeconomic foundation. As Macroeconomic research are more integrated with Microeconomics, more and better micro evidence has been examined to verify Macroeconomic theories. One recent development in this line of research uses detailed firm-level evidence to modify current Macroeconomic theories. In this dissertation extensive firm-level evidence are studied to shed light on important macro issues such as investment dynamics, financial frictions, regulations and productivity growth. In this study firm behaviors are studied and modeled by utilizing theories from a variety of fields in Corporate Finance, Public Finance, International Economics, Macroeconomic Dynamics etc. Implications of these evidence on the economic theory are carefully examined and subsequent extension of existing models are proposed. This dissertation consists of three chapters. All chapters study firm behaviors and their implications on macroeconomics, however, the focus of each is different. The first chapter studies issues of credit conditions, uncertainty and investment; the second chapter (co- authored with Zhiyong An) engages the issues of taxation and international corporate finance; the third chapter show how regulations are likely impact foreign investment. The first chapter explores the heterogeneity in firms' response to high economic uncertainty. I show that the effect of high economic uncertainty on firms' investment varies significantly with the degree of financial constraints. Firm decisions are studied in a model of non-convex adjustment costs and time-varying second moment shocks, with financial constraints. In my model, uncertainty makes financially-constrained firms cautious in capital spending and creates long periods of under-investment for these firms. Estimates from firm-level data show that publicly-traded companies' investment-to-capital ratio falls by an average of around 15% in response to a one standard deviation increase in uncertainty. Firms with easier access to credit are found to be much less responsive to uncertainty, consistent with the model's predictions. This implies that the effectiveness of stimulus policy may largely depend on firms' accessibility to credit in episodes of high uncertainty. The second chapter (co-authored with Zhiyong An) studies how firms respond to a quasi-experiment in China. China's new Corporate income Tax Law was passed in March 2007 and took effect on January 1, 2008. It increases the effective corporate income tax rate from about 15% to 25% for foreign investment enterprises (FIEs), while keeps that unchanged at 25% for domestic enterprises (DEs). This study uses a difference-in-differences approach to investigate FIEs' response to the law. Employing the Chinese Industrial Enterprises Database (2002-2008) to implement the analysis, we find evidence that FIEs are responding to the law by shifting their income out of China. Second, the magnitude of the estimated response is larger for enterprises larger in size, which suggests the greater capability of shifting income across countries for larger enterprises. In addition, the response is more acute for investment enterprises from Hong Kong, Macau, or Taiwan (HMT) than that for other FIEs, which is consistent with the tax haven status of Hong Kong and Macau. The third chapter studies productivity spillovers to domestic firms from foreign direct investment (FDI). Such productivity gain from FDI is considered to be the basis of policies that promote FDI in many countries. In this chapter, firm-level panel data from six European countries are examined to test a number of hypotheses regarding the impact of FDI on the productivity of domestic firms. I find evidence for the backward linkage channel of the FDI spillovers. Using a new dataset, Investing Across Borders 2010 that documents and scores regulations for FDI in 87 countries, this study goes further to explore how FDI-specific policies and institutions impact the spillovers from FDI inflows. Empirical evidence shows that good investment climate is associated with productivity gains, either by direct productivity contribution or by productivity increase in upstream industries. Higher ownership limit is shown to be significantly and positively correlated with productivity. However, productivity impact varies greatly across different investment climate measures.

Download or read book Macroeconomic Uncertainty and Firm Leverage written by Christopher F. Baum and published by . This book was released on 2004 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Effect of Macroeconomic Uncertainty on Household Spending written by Olivier Coibion and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a new survey of European households, we study how exogenous variation in the macroeconomic uncertainty perceived by households affects their spending decisions. We use randomized information treatments that provide different types of information about the first and/or second moments of future economic growth to generate exogenous changes in the perceived macroeconomic uncertainty of some households. The effects on their spending decisions relative to an untreated control group are measured in follow-up surveys. Higher macroeconomic uncertainty induces households to reduce their spending on non-durable goods and services in subsequent months as well as to engage in fewer purchases of larger items such as package holidays or luxury goods. Moreover, uncertainty reduces household propensity to invest in mutual funds. These results support the notion that macroeconomic uncertainty can impact household decisions and have large negative effects on economic outcomes.

Download or read book Firm Decisions Under Jump diffusive Dynamics written by Neha Deopa and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We present a model of firm investment under uncertainty and partial irreversibility in which uncertainty is represented by a jump diffusion. This allows to represent both the continuous Gaussian volatility and the discontinuous uncertainty related to information arrival, sudden changes and large shocks. The model shows how both sources of uncertainty negatively impact the optimal investment and disinvestment policies, and how the presence oflarge negative jumps can drastically affect the firm's ability to recover. Our results show that the standard Gaussian framework consistently underestimates the negative effect of uncertainty on firm investment decisions. We test these predictions on a panel dataset of UK firms: we first structurally estimate the uncertainty parameters using multinomial maximum likelihood and differential evolution techniques and subsequently study their impact on firm investment rates, validating our model predictions.

Download or read book Uncertainty and Unemployment written by Sangyup Choi and published by International Monetary Fund. This book was released on 2015-02-23 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the role of uncertainty shocks in explaining unemployment dynamics, separating out the role of aggregate and sectoral channels. Using S&P500 data from the first quarter of 1957 to third quarter of 2014, we construct separate indices to measure aggregate and sectoral uncertainty and compare their effects on the unemployment rate in a standard macroeconomic vector autoregressive (VAR) model. We find that aggregate uncertainty leads to an immediate increase in unemployment, with the impact dissipating within a year. In contrast, sectoral uncertainty has a long-lived impact on unemployment, with the peak impact occurring after two years. The results are consistent with a view that the impact of aggregate uncertainty occurs through a “wait-and-see” mechanism while increased sectoral uncertainty raises unemployment by requiring greater reallocation across sectors.

Download or read book Macroeconomic Uncertainty written by Lars Oxelheim and published by . This book was released on 1987 with total page 251 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Economics of Imperfect Markets written by Giorgio Calcagnini and published by Springer Science & Business Media. This book was released on 2009-10-22 with total page 237 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a collection of eleven papers concerned with the effects of market imperfections on the decision-making of economic agents and on economic policies that try to correct the inefficient market outcomes due to those imperfections. As a consequence, real and financial imperfections are related : economic decisions are simultaneously affected by imperfections present both in real and financial markets. Notwithstanding the obvious fact that market interdependence is not novel, scholar interests are typically concentrated on the specific relationship among economic decisions originating from particular imperfections. This explains why, in the case of perfect financial markets, we can speak of "the" us.

Download or read book Banking and Finance written by Razali Haron and published by BoD – Books on Demand. This book was released on 2020-12-23 with total page 278 pages. Available in PDF, EPUB and Kindle. Book excerpt: The banking and finance industry plays a significant role in the economy of a nation. As such, continuous research and up-to-date feeds are necessary for it to stay competitive and resilient. Due to its revolving and dynamic nature as well as its significance and interlinkages with other industries, a well-functioning banking and finance system is vital in safeguarding the interest of all stakeholders. Banking and Finance covers a wide range of essential topics highlighting major issues related to banking and finance. The book is rich with empirical evidence, scientific researches, best practices, and recommendations, making it a compact yet handy reference for readers, especially those who are in the field of banking and finance.

Download or read book Innocent Bystanders Monetary Policy and Inequality in the U S written by Mr.Olivier Coibion and published by International Monetary Fund. This book was released on 2012-08-01 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effects and historical contribution of monetary policy shocks to consumption and income inequality in the United States since 1980. Contractionary monetary policy actions systematically increase inequality in labor earnings, total income, consumption and total expenditures. Furthermore, monetary shocks can account for a significant component of the historical cyclical variation in income and consumption inequality. Using detailed micro-level data on income and consumption, we document the different channels via which monetary policy shocks affect inequality, as well as how these channels depend on the nature of the change in monetary policy.

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 Investment under Uncertainty written by Robert K. Dixit and published by Princeton University Press. This book was released on 2012-07-14 with total page 484 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Trade Credit and Bank Credit written by Inessa Love and published by World Bank Publications. This book was released on 2005 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The authors study the effect of financial crises on trade credit in a sample of 890 firms in six emerging economies. They find that although provision of trade credit increases right after the crisis, it consequently collapses in the following months and years. The authors observe that firms with weaker financial position (for example, high pre-crisis level of short-term debt and low cash stocks and cash flows) are more likely to reduce trade credit provided to their customers. This suggests that the decline in aggregate credit provision is driven by the reduction in the supply of trade credit, which follows the bank credit crunch. The results are consistent with the "redistribution view" of trade credit provision, in which bank credit is redistributed by way of trade credit by the firms with stronger financial position to the firms with weaker financial stand "--World Bank web site.

Download or read book Measuring Global and Country Specific Uncertainty written by Ezgi O. Ozturk and published by International Monetary Fund. This book was released on 2017-10-30 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Motivated by the literature on the capital asset pricing model, we decompose the uncertainty of a typical forecaster into common and idiosyncratic uncertainty. Using individual survey data from the Consensus Forecasts over the period of 1989-2014, we develop monthly measures of macroeconomic uncertainty covering 45 countries and construct a measure of global uncertainty as the weighted average of country-specific uncertainties. Our measure captures perceived uncertainty of market participants and derives from two components that are shown to exhibit strikingly different behavior. Common uncertainty shocks produce the large and persistent negative response in real economic activity, whereas the contributions of idiosyncratic uncertainty shocks are negligible.