Investment under uncertainty: The nature of demand shocks and the expected profitability of capital

This paper analyses the disparity regarding the sign of the investment–uncertainty relationship in models of investment under symmetric adjustment costs. That sign is determined by the shape of the profit function, which is related to the nature of demand shocks.

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Year of publication:	2012
Authors:	Gil, Pedro Mazeda
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 114.2012, 2, p. 154-156
Publisher:	Elsevier
Subject:	Demand uncertainty \| Expected profitability of capital \| Jensen’s inequality

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Type of publication:	Article
Classification:	D21 - Firm Behavior ; D89 - Information and Uncertainty. Other
Source:	RePEc - Research Papers in Economics

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