We consider optimal incremental capital accumulation in the presence of investment irreversibility and general price uncertainty. We present a set of general conditions under which the optimal capital accumulation path can be explicitly characterized in terms of an ordinary threshold rule...

What began as a financial crisis in the United States in 2007-2008 quickly evolved into a massive crisis of the global real economy. We investigate the importance of the bank lending and firm borrowing channel in the international transmission of bank distress to the real economy - in...

We investigate within a continuous time setting how Knightian uncertainty characterized by k-ignorance affects the optimal timing policies of a risk-neutral and uncertainty averse investor in the case where the exercise payoff is monotonic. We prove that increased Knightian uncertainty...

Pure strategy Markov perfect equilibria (MPE) in dynamic cake sharing problems are analyzed. Each player chooses under perfect information how much to eat from the current cake and how much to leave to the next period. The left over cake grows according to a given growth function. With linear...

This paper studies investment incentives in the steady state of a dynamic bilateral matching market. Because of search frictions, both parties in a match are partially locked-in when they bargain over the joint surplus from their sunk investments. The associated holdup problem depends on market...

This paper studies the innovation dynamics of an oligopolistic industry. The firms compete not only in the output market but also by engaging in productivity enhancing innovations to reduce labor costs. Rent sharing may generate productivity dependent wage differentials. Productivity growth...

This study investigates firm survival and employment growth of start-ups by unemployed people in East and West Germany as promoted by the Work Support Act (so called bridging allowances). In 1994, the services provided were improved considerably, which led to a sharp increase in the number of...

The objective of this study is to provide an alternative characterization of the optimal value function of a certain Black- Scholes-type optimal stopping problem where the underlying stochastic process is a general random walk, i.e. the process constituted by partial sums of an IID sequence of...

The importance of institutional settings for economic development outcomes is broadly acknowledged nowadays. This paper investigates the role of official statistics in alleviating financing constraints in emerging and developing economies, with a particular focus on Sub-Saharan Africa. Official...

We investigate how intangible capital in form of intellectual property, such as patents, might mitigate financing constraints. While scholars have already argued that patents might have a signalling value reducing information asymmetries between borrowers and lenders, we quantify the value of...