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Irreversible Investment Under Uncertainty With Taxation
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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 Under Uncertainty with Taxation by : Charles Coleman
Download or read book Irreversible Investment Under Uncertainty with Taxation written by Charles Coleman and published by . This book was released on 1995 with total page 222 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Progressive Taxation & Irreversible Investment under Uncertainty by :
Download or read book Progressive Taxation & Irreversible Investment under Uncertainty written by and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Progressive Taxation and Irreversible Investment Under Uncertainty by : Luis H. R. Alvarez
Download or read book Progressive Taxation and Irreversible Investment Under Uncertainty written by Luis H. R. Alvarez and published by . This book was released on 2005 with total page 15 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 Impact of Tax Uncertainty on Irreversible Investment by :
Download or read book Impact of Tax Uncertainty on Irreversible Investment written by and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Cost Uncertainty, Taxation, and Irreversible Investment by : Sumru Altuğ
Download or read book Cost Uncertainty, Taxation, and Irreversible Investment written by Sumru Altuğ and published by . This book was released on 1997 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Impact of Tax Uncertainty on Irreversible Investment by : Rainer Niemann
Download or read book The Impact of Tax Uncertainty on Irreversible Investment written by Rainer Niemann and published by . This book was released on 2007 with total page 18 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 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.
Book Synopsis Uncertainty and Irreversible Investment by : Carlo A. Favero
Download or read book Uncertainty and Irreversible Investment written by Carlo A. Favero and published by . This book was released on 1992 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Irreversible Investment with Uncertainty and Scale Economies by : Avinash K. Dixit
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:
Book Synopsis Irreversible Investment with Embodied Technological Progress by : Bruno de Oliveira Cruz
Download or read book Irreversible Investment with Embodied Technological Progress written by Bruno de Oliveira Cruz and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we propose to explain capital accumulation in a stochastic framework by taking into account the two main motives for investment. Specifically, firms invest to expand capacity and to replace old machines. The model considers irreversible investment under uncertainty and embodied technological progress. It is shown to be consistent with the following empirical observations: Investment is lumpy and infrequent at the firm level; firms can invest even if they have not reached full capacity and technological progress is largely investment specific. We extend the paper of Pindyck (1988), by introducing embodied technological progress. To produce firms use irreversible capital, perfectly flexible labor, and energy whose price is stochastic. Capital and energy are complementary. We show that uncertainty makes firms to postpone investment, increasing the age of the oldest machine and reducing the proportion of new machines in the total stock of capital. We provide an exercise with tax credit to acquire new machines; it is shown that under the hypothesis of embodiment and uncertainty, the tax credit is not effective.
Book Synopsis Investment with Uncertain Tax Policy by : Kevin A. Hassett
Download or read book Investment with Uncertain Tax Policy written by Kevin A. Hassett and published by . This book was released on 1994 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: In models with irreversible investment, increasing uncertainty about prices has been shown to increase the required rate of return (hurdle rate) and delay investment (e.g., Pindyck, 1988). One serious form of uncertainty faced by firms, a form that policy makers could conceivably control, is tax uncertainty. In this paper, we show that it does not follow from past work that tax policy uncertainty increases the expected hurdle price ratio and delays investment. This is because tax uncertainty has an unusual form that distinguishes it from price uncertainty: tax rates tend to remain constant for many years, and then change in large jumps. When tax policy follows a jump process, firms' expectations of the likelihood of the jump occurring have important effects on investment. Indeed, as we show below, while price uncertainty increases the hurdle rate and slows down investment, tax uncertainty has the opposite effect
Book Synopsis Essays on Asymmetries, Uncertainty, and Investment by : Woojin Youn
Download or read book Essays on Asymmetries, Uncertainty, and Investment written by Woojin Youn and published by . This book was released on 1998 with total page 366 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Investment with Uncertain Tax Policy by : Kevin A. Hassett
Download or read book Investment with Uncertain Tax Policy written by Kevin A. Hassett and published by . This book was released on 2010 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: In models with irreversible investment, increasing uncertainty about prices has been shown to increase the required rate of return (hurdle rate) and delay investment (e.g., Pindyck, 1988). One serious form of uncertainty faced by firms, a form that policy makers could conceivably control, is tax uncertainty. In this paper, we show that it does not follow from past work that tax policy uncertainty increases the expected hurdle price ratio and delays investment. This is because tax uncertainty has an unusual form that distinguishes it from price uncertainty: tax rates tend to remain constant for many years, and then change in large jumps. When tax policy follows a jump process, firms' expectations of the likelihood of the jump occurring have important effects on investment. Indeed, as we show below, while price uncertainty increases the hurdle rate and slows down investment, tax uncertainty has the opposite effect.
Book Synopsis Investment Effects of Wealth Taxes Under Uncertainty and Irreversiblity by : Rainer Niemann
Download or read book Investment Effects of Wealth Taxes Under Uncertainty and Irreversiblity written by Rainer Niemann and published by . This book was released on 2015 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: The growing dissatisfaction with perceived distributional inequality and budgetary constraints gave rise to a discussion on the (re-)introduction of wealth taxes. Wealth taxes are typically levied on private wealth, in some countries also on corporate wealth. To avoid misleading statements concerning possible distributional consequences of wealth taxes, preceding analyses of the economic and particularly investment effects are necessary. As investments drive job creation, tax-induced changes in investment timing may significantly affect the income and wealth distribution. We analyze the impact of wealth taxes on investment timing under uncertainty and irreversibility and the propensity to carry out risky projects. Using a Dixit/Pindyck type real options model we find that wealth taxes have real effects. This means that higher wealth tax rates can either stimulate or depress the propensity to invest in risky projects. We find that apparently paradoxical wealth tax effects (accelerated investment due to higher wealth tax rates) are more likely for low interest rates and for high-risk investments. Using either historical cost or fair value accounting may affect investment timing ambiguously. Thus, the design of wealth taxes is crucial for the resulting delay or acceleration of investment. Although our model takes an individual perspective, our findings are also relevant for the current tax policy discussion on the introduction of wealth taxes. Our results indicate that wealth taxes are particularly harmful for specific classes of investments, for example low-risk investments.
Book Synopsis Irreversible Investment Under Uncertainty when Industry Structure is Changing by : Athanasios Episcopos
Download or read book Irreversible Investment Under Uncertainty when Industry Structure is Changing written by Athanasios Episcopos and published by . This book was released on 1993 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
