In economic situations where action entails a fixed cost, inaction is the norm. Action is taken infrequently, and adjustments are large when they occur. Interest in economic models that exhibit ''lumpy'' behavior of this kind has exploded in recent years, spurred by growing evidence that it is...

This paper develops a model of investment decisions in which uncertainty about a one-time change in tax policy induces the firm to temporarily stop investing--to adopt a wait-and-see policy. After the uncertainty is resolved, the firm exploits the tabled projects, generating a temporary...

The market for a durable good sold by a monopolist is examined by using both continuous-time and discrete-time versions of the same model. The requirement that buyers' expectations must be fulfilled along the realized path of production is shown to place no restrictions on that path. Even the...