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We examine interactions between investment and financing decisions in a dynamic model where the firm can alter the mix of debt and equity financing and exercise a randomly arriving and potentially short lived growth option. The firm will typically finance the exercise of the growth option with...
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As elsewhere in the world, in the Western Balkans the COVID-19 pandemic has plunged countries into deep recession. Because of the recession, labor market conditions have taken a turn for the worse and welfare improvements have been interrupted, although government response measures cushioned the...
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quantifying the impact of uncertainty on macroeconomic dynamics based on the premise that uncertainty causes economic activity to …
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ascribed to the specific int eraction of consumption and portfolio choice in the determination of growth and welfare. …
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We show that an increase in aggregate uncertainty - measured by stock market volatility - reduces productivity growth … uncertainty, firms that are credit constrained switch the composition of investment by reducing productivity-enhancing investment … uncertainty (Baker et al., 2016) is used instead of stock market volatility as a measure of aggregate uncertainty. …
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