The possibility of low-probability extreme natural events has reignited the debate over the optimal intensity and timing of climate policy. In this paper, we contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time...

This article summarises our studies on the optimal timing of climate policy adoption by focusing on ambiguity in the climate damage cost assessments (Chen et al., 2011) and on the limited time to achieve certain climate policy targets (Chen et al., 2012). Using real options theory, both studies...

In this paper we analyse the impact of policy uncertainty on foreign direct investment strategies. The paper follows the real options approach, which allows to investigate the value to a firm of waiting to invest and/or disinvest, when payoffs are stochastic due to political uncertainty and...

The standard literature on working time has modelled the decisions of firms in a deterministic framework in which firms can choose between employment and overtime (given mandated standard hours). Contrary to this approach, we follow the real options approach, which allows us to investigate the...

Employing a continuous-time real options modeling framework, this paper scrutinizes the incentives to invest in German offshore wind farms. The focus of the analysis is the mode of action of the German feed-in tariff system for offshore wind energy deployment. The numerical results reveal that...

This paper provides a modelling framework for evaluating the exchange rate dynamics in target zone regime with undisclosed bands. We generalize the literature to allow for asymmetric one-sided regimes. Market participants' expectation formation about the undisclosed band change as they learn...

The possibility of low-probability extreme events has reignited the debate over the optimal intensity and timing of climate policy. In this paper we therefore contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time...