Download or read book Uncertainty Instability and Irreversible Investment Theory Evidence and Lessons for Africa written by Luis Servén and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: February 1997 Instability and uncertainty are important factors in Africa's poor investment record over the past two decades. A recent (but rapidly growing) literature has focused on how uncertainty and instability affect the adoption of fixed investment projects. That literature shows that if fixed investment projects are costly or impossible to reverse, uncertainty can become a powerful deterrent to investment. Serven reviews the literature on irreversible investment to identify the implications for macroeconomic policy and to gauge the practical importance, especially for Sub-Saharan Africa, of the link between uncertainty and investment. He presents empirical evidence on the negative association between investment performance and measures of instability, using cross-section time-series data. That evidence suggests that instability and uncertainty are important factors in Africa's poor investment record over the last two decades. This paper - a product of the Macroeconomics and Growth Division, Policy Research Department - is part of a larger effort in the department to understand the determinants of private investment.

Download or read book Uncertainty Instability and Irreversible Investment written by Banco Internacional de Reconstrucción y Fomento. Policy Research Department and published by . This book was released on 1997 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:

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 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 Uncertainty and Investment written by Robert S. Pindyck and published by . This book was released on 2010 with total page 75 pages. Available in PDF, EPUB and Kindle. Book excerpt: Most investment expenditures have two important characteristics: First, they are largely irreversible; the firm cannot disinvest, so the expenditures are sunk costs. Second, they can be delayed, allowing the firm to wait for new information about prices, costs, and other market conditions before committing resources. An emerging literature has shown that this has important implications for investment decisions, and for the determinants of investment spending. Irreversible investment is especially sensitive to risk, whether with respect to future cash flows, interest rates, or the ultimate cost of the investment. Thus if a policy goal is to stimulate investment, stability and credibility may be more important than tax incentives or interest rates. This paper presents some simple models of irreversible investment, and shows how optimal investment rules and the valuation of projects and firms can be obtained from contingent claims analysis, or alternatively from dynamic programming. It demonstrates some strengths and limitations of the methodology, and shows how the resulting investment rules depend on various parameters that come from the market environment. It also reviews a number of results and insights that have appeared in the literature recently, and discusses possible policy implications.

Download or read book Is the Firm level Relationship Between Uncertainty and Irreversible Investment Non linear written by Yigal Menashe and published by . This book was released on 2005 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 Irreversible Investment Under Uncertainty Contingent Claims Analysis and Competition written by Athanasios Episcopos and published by . This book was released on 1992 with total page 144 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Irreversible Investment Under Uncertainty Contigent Claims Analysis and Competition written by Athanasios Episcopos and published by . This book was released on 1992 with total page 288 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Economic Instability and Aggregate Investment written by Robert S. Pindyck and published by . This book was released on 1993 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using the irreversibility approach to investment, a robust, negative relationship between inflation and capital formation is found for high- inflation countries in Latin America and for low- inflation economies in the OECD.

Download or read book Irreversible Investment Uncertainty and Hysteresis written by Matthew Charles Goodson and published by . This book was released on 1994 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Irreversible Investment with Uncertainty and Scale Economies written by Avinash K. Dixit and published by . This book was released on 1992 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Effects of Regime switching Uncertainty on Irreversible Investment Decisions written by Catherine Anne Pattillo and published by . This book was released on 1996 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Implications of Parameter Uncertainty for Irreversible Investment Decisions written by Concordia University. Department of Economics and published by . This book was released on 1995 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Testing Self selection in Transitions Between the Public Sector and the Business Sector written by Yigal Menashe and published by . This book was released on 2008 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Irreversible Investment Under Uncertainty with Bankruptcy Risk written by Kian Esteghamat and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of existing debt on irreversible investment decisions. We confirm that bankruptcy risk discourages investment but find that the impact of debt on firm decisions decreases as uncertainty increases.

Download or read book Risk Aversion Price Uncertainty and Irreversible Investments written by Rob Willem Jean van den Goorbergh and published by . This book was released on 2003 with total page 20 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. Within a general setting, we prove the existence of a unique critical output price that distinguishes price regions in which it is optimal for a risk averse investor to invest and price regions in which one should refrain from investing. We use a class of utility functions that exhibit non-increasing absolute risk aversion to examine the effects of risk aversion, price uncertainty, 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 price uncertainty increases the value of deferring irreversible investments. This effect is stronger for high levels of risk aversion. In addition, we provide, for the first time, closed-form comparative statics formulas for the risk neutral investor.