Conventional wisdom holds that lack of government commitment deters foreign investment in developing countries. Yet … risk and host governments can offer upfront subsidies that compensate foreign investors for their sunk cost. This paper … investment in a politically risky world …

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 …

's macroeconomic performance, as reflected by impulse response functions for investment, employment and output. Our study adds to …

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 …

This paper augments the neoclassical growth model to study the macroeconomic effects of idiosyncratic investment risk … quantitatively significant. Finally, cyclical variation in private investment risks is shown to amplify the transitional dynamics …

This paper examines the risk aspects of an investment-based defined contribution Social Security plan. We focus on the … investment risk can be reduced further by using a mixed system that combines pay-as-you-go and investment-based components or … risk after the plan is fully phased in. Individuals deposit a fraction of wages to a Personal Retirement Account (PRA …

) developed countries exhibit larger inflows of foreign direct investment (FDI), (ii) countries subject to high investment risk … are those that typically receive low FDI inflows, and (iii) investment risk is generally higher in fractionalized and … investment risk channel. I then inspect the theoretical mechanism using a dynamic political-economy model of redistribution …

probability of disaster leads to a collapse of investment and a recession, an increase in risk spreads, and a decrease in the … shocks to aggregate uncertainty, I introduce a small, time-varying risk of economic disaster in a standard real business … risk of disaster does not affect the path of macroeconomic aggregates - a "separation theorem" between macroeconomic …

consumption, portfolio allocation, financing, investment, and business exit decisions. The optimal capital structure is determined …. More risk-averse entrepreneurs default earlier, but also choose higher leverage, even though leverage makes his equity more … risky. Non-diversified entrepreneurs demand both systematic and idiosyncratic risk premium. Cash-out option and external …

We re-examine the basic investment problem of deciding when to incur a sunk cost to obtain a stochastically fluctuating … benefit. The optimal investment rule satisfies a trade-off between a larger versus a later net benefit; we show that this … demand curve. We reinterpret the optimal investment rule as a markup formula involving an elasticity that has exactly the …