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Irreversible Investment Under Interest Rate Variability
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Book Synopsis Irreversible Investment Under Interest Rate Variability by : Luis H. R. Alvarez
Download or read book Irreversible Investment Under Interest Rate Variability written by Luis H. R. Alvarez and published by . This book was released on 2002 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Tiivistelmä: Peruuttamattomat investoinnit muuttuvalla korolla : uusia tuloksia.
Book Synopsis Irreversible Investment Under Interest Rate Variability by : Luis H. R. Alvarez
Download or read book Irreversible Investment Under Interest Rate Variability written by Luis H. R. Alvarez and published by . This book was released on 2001 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Irreversible Investment Under Interest Rate Variability by : Luis H. R. Alvarez
Download or read book Irreversible Investment Under Interest Rate Variability written by Luis H. R. Alvarez and published by . This book was released on 2003 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Irreversibility, Uncertainty, and Investment by : Robert S. Pindyck
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.
Book Synopsis Irreversible Investment Under Interest Variability by : Luis H. R. Alvarez
Download or read book Irreversible Investment Under Interest Variability written by Luis H. R. Alvarez and published by . This book was released on 2002 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Investment Under Uncertainty With a Zero Lower Bound on Interest Rates by : George Dotsis
Download or read book Investment Under Uncertainty With a Zero Lower Bound on Interest Rates written by George Dotsis and published by . This book was released on 2019 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines irreversible investment decisions when the interest rate is stochastic and constrained by a zero lower bound using the shadow-rate model of Black (1995). In contrast to the commonly found negative relationship between investment and uncertainty, it is shown that the presence of a lower bound on interest rates induces an asymmetric effect of interest rate uncertainty on investment decision. When the interest rate is low an increase in interest rate volatility decreases the value of waiting and increases investment but when the interest rate is high an increase in interest rate volatility increases the value of waiting and decreases investment. When interest rates are stuck at the lower bound and the shadow rate is substantially below the bound, the decision to invest or wait no longer depends on interest rate uncertainty and is determined entirely by cash flow volatility.
Book Synopsis Investment under Uncertainty by : Robert K. Dixit
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.
Book Synopsis Irreversible Investment, Uncertainty and Hysteresis by : Matthew Charles Goodson
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:
Book Synopsis Irreversibility, Uncertainty, and Investment by : Robert S. Pindyck
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 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Irreversible Investment with Regime Shifts by : Xin Guo
Download or read book Irreversible Investment with Regime Shifts written by Xin Guo and published by . This book was released on 2004 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: Under the real options approach to investment under uncertainty, agents formulate optimal policies under the assumption that firms' growth prospects do not vary over time. This paper proposes and solves a model of investment decisions in which the growth rate and volatility of the decision variable shift between different states at random times. A value-maximizing investment policy is derived such that in each regime the firm's investment policy is optimal and recognizes the possiblity of a regime shift. Under this policy, investment is intermittent and increases with marginal q. Moreover, the rate of investment typically is very small but exhibits some spurts of growth. Implications for marginal q and the user cost of capital are also examined.
Book Synopsis Real and Financial Uncertainty and Investment Decisions by : Giorgio Calcagnini
Download or read book Real and Financial Uncertainty and Investment Decisions written by Giorgio Calcagnini and published by . This book was released on 2000 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper aims at analyzing the role of uncertainty on investment. In our analysis we will follow recent economic literature concerning stochastic models of irreversible investment and restrict our attention to the Italian economy. We show that theoretically, and in the presence of irreversibility, demand and interest rate uncertainty both reduce demand for capital. Our empirical results support the traditional interpretation according to which expected demand growth rates positively affect investment, while the interest rate level is negatively correlated to the accumulation rate. As for uncertainty, investment decisions in Italy are negatively affected by demand volatility, while interest rate volatility seems to play no significant role.
Book Synopsis Real Options Valuation by : Marcus Schulmerich
Download or read book Real Options Valuation written by Marcus Schulmerich and published by Springer Science & Business Media. This book was released on 2010-08-03 with total page 400 pages. Available in PDF, EPUB and Kindle. Book excerpt: After the ?rst edition of this book was published in early 2005, the world has changed dramatically and at a pace never seen before. The changes that - curred in 2008 and 2009 were completely unthinkable two years before. These changes took place not only in the Finance sector, the origin of the crisis, but also, as a result, in other economic sectors like the automotive sector. Governments now own substantial parts, if not majorities, in banks or other companies which recorded losses of double digit billions of USD in 2008. 2008 saw the collapse of leading stand-alone U. S. investment banks. In many co- tries interest rates fell close to zero. What has happend? While the economy showed strong growth in 2004 to 2006, the Subprime or Credit Crisis changed the picture completely. What started in the U. S. ho- ing market in late 2006 became a full-?edged global ?nancial crisis and has a?ected ?nancial markets around the world. A decline in U. S. house prices and increasing interest rates caused a higher rate of subprime mortgage delinqu- cies in the U. S. and, due to the wide distribution of securitized assets, had a negative e?ect on other markets. As a result, markets realized that risks had been underestimated and volatility increased. This development culminated in the bankruptcy of the investment bank Lehman Brothers in mid September 2008.
Book Synopsis Real Estate and the Economy by : Robert Novy-Marx
Download or read book Real Estate and the Economy written by Robert Novy-Marx and published by . This book was released on 2007 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: While significant effort has been devoted to characterizing the role that irreversibility plays in individual agents' investment behavior, very little has been devoted to the aggregate economic implications of investment irreversibility. Yet irreversibility prevents the continual allocation of capital to its most productive use, with first-order economic consequences. Moreover, the asymmetric nature of the friction, which prevents disinvestment in bad times but allows investment in good times, means its impact varies over the business cycle. In order to study the aggregate effects of irreversibility, this paper introduces a general equilibrium model with two consumption goods and irreversible investment. After characterizing the optimal investment strategy of competitive heterogeneous developers, we show that this behavior endogenously generates a business cycle: periods of more intensive real estate development are associated with greater consumption growth, even when fundamental shocks are stationary. We also consider an array of business cycle-dependent macroeconomic implications, including the impact of irreversibility on the term structures of interest rates and interest rate volatility, consumption risk premia, forward prices and forward price volatilities, and the expected returns to real assets. Finally, we consider the role that irreversibility plays in both the time-series and cross-section of investment, generating quot;lumpyquot; investment at the firm level and heterogeneity across firms. There is less heterogeneity, in equilibrium, than is socially optimal. Competitive pressures drive developers to build too soon, and consequently on too small a scale, to efficiently utilize resources diverted to the housing sector.
Book Synopsis Real Options and Investment Under Uncertainty by : Eduardo S. Schwartz
Download or read book Real Options and Investment Under Uncertainty written by Eduardo S. Schwartz and published by MIT Press. This book was released on 2004 with total page 890 pages. Available in PDF, EPUB and Kindle. Book excerpt: The study of investment under uncertainty was stagnant for several decades until developments in real options revitalized the field. The topics covered in this book include the reasons behind the under-investment programme.
Book Synopsis The Effects of Real Exchange Rate Volatility on Sectoral Investment by : Bahar Erdal
Download or read book The Effects of Real Exchange Rate Volatility on Sectoral Investment written by Bahar Erdal and published by Routledge. This book was released on 2017-05-18 with total page 172 pages. Available in PDF, EPUB and Kindle. Book excerpt: Originally published in 1997. This study investigates what the effects of real exchange rate volatility are on sectorial investment in the fixed and flexible exchange rate systems. It lays out the results of research into the effects of the levels and volatility of real exchange rates on investment in the manufacturing sectors of the countries in the European Monetary System as well as of the countries in the flexible exchange rate system, with data from between 1973 and 1993. Examining the differences between the two systems in the results this book also looks at exchange rate effects on interest rates at the time.
Book Synopsis Irreversible Investment with Strategic Interactions by : Robin Mason
Download or read book Irreversible Investment with Strategic Interactions written by Robin Mason and published by . This book was released on 2001 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Uncertainty, Instability, and Irreversible Investment by : Luis Serven
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:
