This paper studies the effect of interest rates on investment in an environment where firms make irreversible … delaying investment. These two forces combine to generate an aggregate investment demand curve that is always a backward …-bending function of the interest rate. At low rates, increasing the interest rate stimulates investment by raising the cost of delay …

version of the separation of ownership and control -- Jensen's (1986) free cash flow theory--into a dynamic equilibrium model … and study the effect of imperfect corporate control on asset prices and investment. We assume that firms are run by empire … aggregate free cash flow of the corporate sector is an important state variable in explaining asset prices and investment. We …

investment; the impact of uncertainty on investment occurs primarily through changes in credit spreads; and innovations in credit … spreads have a strong effect on investment, irrespective of the level of uncertainty. These findings raise a question … financial shocks. By influencing the effective supply of credit, both types of shocks exert a powerful effect on investment and …

We quantify the role of financial leverage behind the sluggish post-crisis investment performance of European firms. We … investment more after the crisis. This negative effect is stronger for firms holding short-term debt in countries with sovereign … stress, consistent with rollover risk being an important channel influencing investment. The negative effect of firm leverage …

of investment requires a new idea, an quot;optionquot;. When options are scarce, new capital is harder to put in place …, Q rises gradually, as options are used up. Because investment represents an exercise of options, it has an intertemporal …

, consumption/savings, and portfolio selection. For a lump-sum investment payoff and an agent with a sufficiently strong … precautionary savings motive, an increase in volatility can accelerate investment, contrary to the standard real options analysis …. When the agent can trade the market portfolio to partially hedge against investment risk, the systematic volatility is …

We argue that positive co-movements between land prices and business investment are a driving force behind the broad … joint dynamics of land prices and business investment …

The sensitivity of U.S. aggregate investment to shocks is procyclical: the initial response increases by approximately … counterexample to the claim that microeconomic investment lumpiness is inconsequential for macroeconomic analysis …

and volatility on investment strategies. Using the event-risk framework of Duffie, Pan, and Singleton (2000), we provide …