Irreversible Investment and Aggregate Instability PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Irreversible Investment and Aggregate Instability PDF full book. Access full book title Irreversible Investment and Aggregate Instability by S. Kapur. Download full books in PDF and EPUB format.
Author: S. Kapur
Publisher:
ISBN:
Category : Investments
Languages : en
Pages : 23
Get Book Here
Book Description
Author: S. Kapur
Publisher:
ISBN:
Category : Investments
Languages : en
Pages : 23
Get Book Here
Book Description
Author: Robert S. Pindyck
Publisher: World Bank Publications
ISBN:
Category : Capital investments
Languages : en
Pages : 58
Get Book Here
Book Description
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.
Author: Robert S. Pindyck
Publisher:
ISBN:
Category : Developing countries
Languages : en
Pages : 36
Get Book Here
Book Description
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.
Author: Luis Serven
Publisher:
ISBN:
Category : Africa, Sub-Saharan
Languages : en
Pages : 52
Get Book Here
Book Description
Author: Giuseppe Bertola
Publisher:
ISBN:
Category : Investments
Languages : en
Pages : 52
Get Book Here
Book Description
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.
Author: Ben Bernanke
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 24
Get Book Here
Book Description
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
Author: René Aïd
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
We consider a mean-field model of firms competing à la Cournot on a commodity market, where the commodity price is given in terms of a power inverse demand function of the industry-aggregate production. Investment is irreversible and production capacity depreciates at a constant rate. Production is subject to Gaussian productivity shocks, while large non-anticipated macroeconomic events driven by a two-state continuous-time Markov chain can change the volatility of the shocks, as well as the price function. Firms wish to maximize expected discounted revenues of production, net of investment and operational costs. Investment decisions are based on the long-run stationary price of the commodity. We prove existence, uniqueness and characterization of the stationary mean-field equilibrium of the model. The equilibrium investment strategy is of barrier-type and it is triggered by a couple of endogenously determined investment thresholds, one per state of the economy. We provide a quasi-closed form expression of the stationary density of the state and we show that our model can produce Pareto distribution of firms' size. This is a feature that is consistent both with observations at the aggregate level of industries and at the level of a particular industry. We establish a relation between economic instability and market concentration and we show how macroeconomic instability can harm firms' profitability more than productivity fluctuations.
Author: Robert S. Pindyck
Publisher:
ISBN:
Category : Developing countries
Languages : en
Pages : 72
Get Book Here
Book Description
A recent literature suggests that because investment expenditures are irreversible and can be delayed, they may be highly sensitive to uncertainty. We briefly summarize the theory, stressing its empirical implications. We then use cross-section and time-series data for a set of developing and industrialized countries to explore the relevance of the theory for aggregate investment. We find that the volatility of the marginal profitability of capital - a summary measure of uncertainty - affects investment as the theory suggests, but the size of the effect is moderate, and is greatest for developing countries. We also find that this volatility has little correlation with indicia of political instability used in recent studies of growth, as well as several indicia of economic instability. Only inflation is highly correlated with this volatility, and is also a robust explanator of investment.
Author: Luis Serven
Publisher: World Bank Publications
ISBN: 9780821324844
Category : Business & Economics
Languages : en
Pages : 304
Get Book Here
Book Description
This book presents the results of about three years of work finished in early 1992 in the area of private investment and macroeconomic adjustment. Its purpose is to explore the macroeconomic determinants of investment and the causes and cures for the gap between maroeconomic adjustment and stabilization and the resumption of economic growth in developing countries, a gap that even today - 10 years after the debt crisis and the subsequent adjustment of the eighties - remains wide. This volume highlights the central role of capital formation (public and private) in the restoration of sustainable growth.
Author: Ciaran Driver
Publisher: Routledge
ISBN: 113464180X
Category : Business & Economics
Languages : en
Pages : 230
Get Book Here
Book Description
This volume presents studies to explain international investment behaviour and assess its impact on growth and jobs. The authors also examine policy measures to reverse the climate of low investment that has characterised recent years
