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...

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...

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...

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,...

In what follows we show that liquidity constraints can affect a firm's investment even when the constraints are not currently effective. This happens when, at any given time, the firm believes that internal finance is likely to become a constraint in the future. In these circumstances, the value...

In this paper we investigate the effects of introducing explicitly abatement capital in a welfare function which depends on waste stock and consumption. Consumption is assumed to produce an undesiderable residue. Society can control waste accumulation using abatement capital. We focus on two...