Uncertainty and Investment Dynamics.
This paper shows that with (partial) irreversibility higher uncertainty reduces the responsiveness of investment to demand shocks. Uncertainty increases real option values making firms more cautious when investing or disinvesting. This is confirmed both numerically for a model with a rich mix of adj...
| Main Authors: | , , |
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| Format: | Journal article |
| Language: | English |
| Published: |
2007
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