Showing 1 - 10 of 561
When investment is irreversible, theory suggests that firms will be “reluctant to invest.” This reluctance creates a … wedge between the discount rate guiding investment decisions and the standard Jorgensonian user cost (adjusted for risk). We …
Persistent link: https://www.econbiz.de/10005766040
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 …
Persistent link: https://www.econbiz.de/10005766115
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 … firms with high stock prices and good investment opportunities should have discount rates that do not differ systematically …
Persistent link: https://www.econbiz.de/10009150640
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 … firms with high stock prices and good investment opportunities should have discount rates that do not differ systematically …
Persistent link: https://www.econbiz.de/10013123799
Is time-varying firm-level uncertainty a major cause or amplifier of the business cycle? This paper investigates this question in the context of a heterogeneous-firm RBC model with persistent firm-level productivity shocks and lumpy capital adjustment, where cyclical changes in uncertainty...
Persistent link: https://www.econbiz.de/10013154684
-level investment is procyclical. We show that a heterogeneous-firm RBC model with quantitatively realistic countercyclically disperse … state investment rate distribution, produces investment dispersion that positively comoves with the cycle, with a …
Persistent link: https://www.econbiz.de/10013155672
explaining the consumption path after a Marginal Efficiency of Investment shock. We use an otherwise standard medium-scale New …
Persistent link: https://www.econbiz.de/10012984510
The ifo Investment Survey asks firms in the German manufacturing sector about the importance of sales, technological … factors, finance, return expectations, and macroeconomic policy for their investment activity in a given year. We show that … these subjective investment determinants 1) capture economically what their labels suggest, and 2) have strong explanatory …
Persistent link: https://www.econbiz.de/10013315790
Uncertainty about the future course of the economy is a possible driver of aggregate fluctuations. To identify the different dimensions of uncertainty in the macroeconomy we construct a large dataset covering all types of economic uncertainty. We then identify two fundamental factors which...
Persistent link: https://www.econbiz.de/10013045927
Turnovsky (1995) derives in a continuous-time model of a decentralized economy that the correct specification of the firm’s objective function is to maximize the initial value of its outstanding securities. The firm value is the discounted flow of real earnings. For the discrete-time version...
Persistent link: https://www.econbiz.de/10008534021