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In this paper we build up a theoretical continuous time model to study how future constraints affect current investment decisions. We show that firms constrained in the future, but currently unconstrained, select an optimizing investment trajectory different from that of an identical firm that...
Persistent link: https://www.econbiz.de/10014588355
In this paper we build up a theoretical continuous time model to study how future constraints affect current investment decisions. We show that firms constrained in the future, but currently unconstrained, select an optimizing investment trajectory different from that of an identical firm that...
Persistent link: https://www.econbiz.de/10005046434
In what follows we show that firm’s investment decisions are affected by liquidity constraints even when these constraints are not binding at the present time. This is because the forward looking firm expects that liquidity will become a constraint in the future. As a consequence, liquidity...
Persistent link: https://www.econbiz.de/10008512987
Persistent link: https://www.econbiz.de/10005351829
Abstract This paper focuses on environmental policies aimed at rising investment in pollution abatement capital. We assume that ecological uncertainty, i.e., uncertainty over the dynamics of pollution, affects firm investment decisions. Capital irreversibility is not postulated but endogenized...
Persistent link: https://www.econbiz.de/10009194628
In this paper we argue that the deceleration of labor productivity is at the root of the slowdown of the European economic growth over the last fifteen years. Using a simple dynamic model of the labor market, we show that this poor performance can only be accounted for by a combination of two...
Persistent link: https://www.econbiz.de/10008629768
In this paper we address the question of whether labor supply shifts are the only source of the productivity slowdown that occurred across European countries in the last 15 years. This explanation implies that labor demand shifts are irrelevant. Using a simple dynamic model of the labor market,...
Persistent link: https://www.econbiz.de/10008464504
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Persistent link: https://www.econbiz.de/10011660518