Higher-order risk effects play an important role in examining economic behavior under uncertainty. A precautionary … presence of an unavoidable risk affects one’s behavior towards a second risk. These two properties also play key roles in …

more attractive for social insurance if a larger part of risk is realized in the first period of the life-cycle. Our …

investment in which the government has access to labor taxation, education subsidies and capital taxation. Social insurance is …

wedge between the discount rate guiding investment decisions and the standard Jorgensonian user cost (adjusted for risk). We …When investment is irreversible, theory suggests that firms will be “reluctant to invest.” This reluctance creates a …

Is real investment fully determined by fundamentals or is it sometimes affected by stock market misvaluation? We … introduce three new tests that: measure the reaction of investment to sales shocks for firms that may be overvalued; use Fama … misvaluation into standard investment equations to estimate the quantitative effect of misvaluation on investment. Overall, the …

Investment in network infrastructure can boost long-term economic growth in OECD countries. Moreover, infrastructure … investment can have a positive effect on growth that goes beyond the effect of the capital stock because of economies of scale … between infrastructure and economic growth. Time-series results reveal a positive impact of infrastructure investment on …

from the risk-adjusted market rate. The overinvestment story predicts that firms with high stock prices and poor investment … firms in making their investment decisions.We use a revealed preference approach that relies on the pattern of investment … spending – combined with investment theory – to estimate the discount rates used by managers. The standard story predicts that …

This paper presents a dynamic model of risk-averse producers’ decision to invest in physical capital and to export. The … model features irreversible investment, no capital markets and fixed and sunk costs to export. Several features of the … distribution of investment rates and export participation patterns observed in firm-level data are closely matched in a calibration …

’s investment of endogenous size. Using a real option approach in continuous time, we show that profit sharing does not affect a … total investment. We also evaluate the reduction in the firm’s value due to profit sharing, linking this reduction to the …