The effect that investment lags has on the uncertainty-investment relationship is studied by modifying the Bar-Ilan and … small, uncertainty affects investment negatively; (ii) A sufficiently large time lag engenders an inverse u …-shape relationship between the degree of uncertainty and the profit level that triggers investment; (iii) When such an inverse u- shape …

The role that Bernanke’s Bad News Principle plays in the modern theory of investment under uncertainty is analyzed. The …

I explore how and and to what extent policy uncertainty can account for the observed long-run cross-country differences …-related investment cost is uncertain. Holding the average one-period investment cost constant, policy uncertainty leads to a higher … capital price and subsequently to lower levels of long-run aggregate investment and output. Policy uncertainty also makes …

This paper shows that, with (partial) irreversibility, higher uncertainty reduces the impact effect of demand shocks on … investment. 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 adjustment costs, time-varying uncertainty, and aggregation over investment …