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The dynamics of investment under uncertainty

Bloom, Nicholas; Bond, Stephen; Van Reenen, John - 2001

We derive robust predictions on the effects of uncertainty on short run investment dynamics in a broad class of models with (partial) irreversibility. When their environment becomes more uncertain firms become more cautious and less responsive to demand shocks. This result contrasts with the...

Persistent link: https://www.econbiz.de/10010293014

The real options effect of uncertainty on investment and labour demand

Bloom, Nicholas - 2000

This paper shows that, contrary to common beliefs, the real options effect of uncertainty plays no role in the long run rate of investment. This is proven for both the standard investment model with Cobb-Douglas production and Brownian motion demand, and also for a broader class of models with...

Persistent link: https://www.econbiz.de/10010330346

Uncertainty Determinants of Corporate Liquidity

Baum, Christopher F.; Caglayan, Mustafa; Stephan, Andreas; … - 2006

This paper investigates the link between the optimal level of non-financial firms? liquid assets and uncertainty. We develop a partial equilibrium model of precautionary demand for liquid assets showing that firms alter their liquidity ratio in response to changes in either macroeconomic or...

Persistent link: https://www.econbiz.de/10010260989

Housing and debt over the life cycle and over the business cycle

Iacoviello, Matteo; Pavan, Marina - 2009

of housing adjustment. In the time-series dimension, the model accounts for the procyclicality and volatility of housing … following question: what are the consequences for aggregate volatility of an increase in household income and a decrease in … downpayment requirements? They distinguish between an early period, the 1950s though the 1970s, when household income risk was …

Persistent link: https://www.econbiz.de/10010280939

What Do We Know About Investment Under Uncertainty?

Carruth, Alan; Dickerson, Andy; Henley, Andrew - 1998

Recent theoretical developments relating to investment under uncertainty have highlighted the importance of irreversibility for the timing of investment expenditures and their expected returns. This has subsequently stimulated a growing empirical literature which examines uncertainty and...

Persistent link: https://www.econbiz.de/10010443307

A new look at uncertainty shocks: Imperfect information and misallocation

Senga, Tatsuro - 2015

Uncertainty faced by individual firms appears to be heterogeneous. In this paper, I construct new empirical measures of firm-level uncertainty using data from the I/B/E/S and Compustat. These new measures reveal persistent differences in the degree of uncertainty facing individual firms not...

Persistent link: https://www.econbiz.de/10011460770

Non-financial corporate risk management and exchange rate volatility in Latin America

Moguillansky, Graciela - 2002

This article studies the currency risk management of multinational companies with investments in Latin American …, by reviewing literature on business and currency risk management, and by analysing some surveys on financial risk …

Persistent link: https://www.econbiz.de/10010279352

Macroeconomic Uncertainty and Firm Leverage

Baum, Christopher F.; Stephan, Andreas; Talavera, Oleksandr - 2004

This paper investigates the link between the optimal level of non-financial firms' leverage and macroeconomic uncertainty. We develop a structural model of a firm's value maximization problem that predicts that as macroeconomic uncertainty increases the firm will decrease its optimal level of...

Persistent link: https://www.econbiz.de/10010260813

How to analyze the investmentuncertainty relationship in real option models?

Lund, Diderik - 2003

. The "opposing" effect is not always opposing. Systematic risk cannot generally be assumed to increase with volatility. A …

Persistent link: https://www.econbiz.de/10010320899

Is there a Credit Channel in Austria? The Impact of Monetary Policy on Firms' Investment Decisions

Wesche, Katrin - 2000

Though most economists agree that monetary policy has significant effects on the real sector in the short run, interest-rate elasticities of macroeconomic aggregates in general are found to be low. Recently, the credit channel has been discussed as an additional channel through which monetary...

Persistent link: https://www.econbiz.de/10013369958