Expectations, Adjustment Costs and the Optimal Investment of a Value-maximizing Firm PDF Download
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Author: Luis Alvarez
Publisher:
ISBN:
Category : Capital
Languages : en
Pages : 112
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Author: Luis Alvarez
Publisher:
ISBN:
Category : Capital
Languages : en
Pages : 112
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Book Description
Author: Peter M. Kort
Publisher: Springer
ISBN:
Category : Business & Economics
Languages : en
Pages : 200
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Book Description
This book is a contribution to the area of dynamic models of the firm. In Chapter 1, a general investment decision rule based on the concept of net present value of marginal investment is developed. In chapter 2, the rule is applied in deterministic dynamic models of the firm. This rule can be expressed as follows: If the net present value of marginal investment is positive, it is optimal for the firm to grow as fast as possible; If the net present value of marginal investment is zero, the firm is in its optimal situation and it determines its investment policy to maintain this position; If the net present value of marginal investment is negative, it is optimal for the firm to contract as much as possible. In Chapter 3, the influence of adjustment costs of investment on optimal dynamic firm behaviour is studied. To that end, models with convex and concave adjustment cost functions are developed and analysed by using the investment decision rule described above. In Chapter 4, the stochastic dynamic theory of the firm is extended by connecting it with the Intertemporal Capital Asset Pricing Model (ICAPM) developed by Merton.
Author: Janice C. Eberly
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This paper derives closed-form solutions for the investment and market value, under uncertainty, of competitive firms with constant returns to scale production and convex costs of adjustment. Solutions are derived for the case of irreversible investment as well as for reversible investment. Optimal investment is a non-decreasing function of q, the shadow value of capital. The conditions of optimality imply that q cannot contain a bubble; thus, optimal investment depends only on fundamentals. However, the value of the firm may contain a bubble that does not affect investment behavior. Relative to the case of reversible investment, the introduction of irreversibility does not affect q, but it reduces the fundamental market value of the firm.
Author: Robert E. Lucas
Publisher: U of Minnesota Press
ISBN: 0816610711
Category : Business & Economics
Languages : en
Pages : 734
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Assumptions about how people form expectations for the future shape the properties of any dynamic economic model. To make economic decisions in an uncertain environment people must forecast such variables as future rates of inflation, tax rates, governme.
Author: Robert E. Lucas
Publisher: U of Minnesota Press
ISBN: 1452901716
Category : Business & Economics
Languages : en
Pages : 410
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Book Description
Rational Expectations and Econometric Practice was first published in 1981. Minnesota Archive Editions uses digital technology to make long-unavailable books once again accessible, and are published unaltered from the original University of Minnesota Press editions. Assumptions about how people form expectations for the future shape the properties of any dynamic economic model. To make economic decisions in an uncertain environment people must forecast such variables as future rates of inflation, tax rates, government subsidy schemes and regulations. The doctrine of rational expectations uses standard economic methods to explain how those expectations are formed. This work collects the papers that have made significant contributions to formulating the idea of rational expectations. Most of the papers deal with the connections between observed economic behavior and the evaluation of alternative economic policies. Robert E. Lucas, Jr., is professor of economics at the University of Chicago. Thomas J. Sargent is professor of economics at the University of Minnesota and adviser to the Federal Reserve Bank of Minnesota.
Author:
Publisher:
ISBN:
Category : Control theory
Languages : en
Pages : 450
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Author: Sio-iong Ao
Publisher: World Scientific
ISBN: 9814667374
Category : Technology & Engineering
Languages : en
Pages : 523
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Book Description
Two large international conferences on Advances in Engineering Sciences were held in Hong Kong, March 12-14, 2014, under the International MultiConference of Engineers and Computer Scientists (IMECS 2014), and in London, UK, 2-4 July, 2014, under the World Congress on Engineering 2014 (WCE 2014) respectively. This volume contains 37 revised and extended research articles written by prominent researchers participating in the conferences. Topics covered include engineering mathematics, computer science, electrical engineering, manufacturing engineering, industrial engineering, and industrial applications. The book offers tremendous state-of-the-art advances in engineering sciences and also serves as an excellent reference work for researchers and graduate students working with/on engineering sciences.
Author: Robert E. Lucas
Publisher: U of Minnesota Press
ISBN: 1452908281
Category :
Languages : en
Pages : 335
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Book Description
Assumptions about how people form expectations for the future shape the properties of any dynamic economic model. To make economic decisions in an uncertain environment people must forecast such variables as future rates of inflation, tax rates, governme.
Author: Fumio Hayashi
Publisher:
ISBN:
Category : Corporations
Languages : en
Pages : 84
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Book Description
This paper attempts to provide a framework for analyzing the interaction between real decisions (concerning investment and factor inputs)and financial decisions (concerning debt and new share issues) of a corporation. The model carries a rich menu of tax rates and explicitly incorporates bankruptcy and default. The firm's multi-period optimization problem is set up where real and financial decisions are simultaneously determined to maximize the value of the firm which is the market price of uncertain future dividends. The main results of the paper are as follows:if the firm's after-tax profits are small relative to investment, the firm finances new investment by retentions and debt; if they are large relative to investment, financing additional investment is done through new shares and debt; in the intermediate case, additional investment is financed entirely by debt.
Author: Roger K. Conway
Publisher:
ISBN:
Category : Agricultural machinery
Languages : en
Pages : 32
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Book Description
