Germany over the horizon 2010-2035. The target is to quantify how fuel and carbon price risk impacts investment incentives of … thermal power plants. Results point to findings which are in line with general theory: Accounting for stochasticity increases … ; generation expansion ; uncertainty ; market power …

Following the real option literature, whether or not uncertainty shocks drive business cycles depends on the degree of … adjustment frictions. The more plants freeze and remain inactive in response to increased uncertainty, the stronger the adverse … in uncertainty reduces hiring, quits and job creation, while it raises layoffs and job destruction. Our finding suggests …