Irreversibility, endogenous mean reversion, and the investment decision of a foreign firm

The paper derives a valuation formula for the real option of a firm to undertake an irreversible investment in a foreign economy based on the endogenous dynamics of a stochastic macroeconomic framework with sluggish price adjustment. The option valuation formula is implemented to analyze the impact of macroeconomic dynamics on the attraction of an economy for foreign investors.

MoreLess

Year of publication:	1998
Authors:	Pierdzioch, Christian
Publisher:	Kiel : Kiel Institute of World Economics (IfW)
Subject:	Direktinvestition \| Gesamtwirtschaftliche Investitionstheorie \| Internationale Markteintrittsstrategie \| Sunk Costs \| Optionspreistheorie \| Monetäre Wechselkurstheorie \| Stochastischer Prozess \| Theorie

freely available

Full text |

More access options

Check Google Scholar

In German libraries (KVK)

I need help

More details

Series:	Kiel Working Paper ; 847
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	hdl:10419/46733 [Handle] RePEc:zbw:ifwkwp:847 [RePEc]
Classification:	F21 - International Investment; Long-Term Capital Movements ; F41 - Open Economy Macroeconomics
Source:	EconStor

Persistent link: https://www.econbiz.de/10010275157