We re-examine the basic investment problem of deciding when to incur a sunk cost to obtain a stochastically fluctuating benefit. The optimal investment rule satisfies a trade-off between a larger versus a later net benefit; we show that this trade-off is closely analogous to the standard...

Frontmatter -- Contents -- Preface -- Part I. Introduction -- Chapter 1. A New View of Investment -- Chapter 2. Developing the Concepts Through Simple Examples -- Part II. Mathematical Background -- Chapter 3. Stochastic Processes and Ito's Lemma -- Chapter 4. Dynamic Optimization under...

With US trade and current account deficits approaching 6% of GDP, some have argued that the country is "on the comfortable path to ruin" and that the required "adjustment'' may be painful. We suggest instead that things are fine: although national saving is low, the ratios of household and...