A note on competitive investment under uncertainty
Article Abstract:
A risk-neutral firm involved in investment could be affected in two ways by uncertainty over the future prices of output or costs of input. The firm could invest more as a result of a rise in the value of the marginal unit of capital, or it could invest less as a result of a rise in the cost of investment in a marginal unit of capital. A model shows that uncertainty throughout an industry could negatively impact investment that is irreversible, even under conditions of constant returns to scale and perfect competition.
Publication Name: American Economic Review
Subject: Economics
ISSN: 0002-8282
Year: 1993
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Exchange rates and the political economy of macroeconomic discipline
Article Abstract:
The selection of an exchange rate system by a government raises issues regarding a country's political economy. A model that factors in political instability, external shock variances, average real gross domestic product growth and the probability of abandoning a fixed rate regime is developed. The results show that unstable countries, countries with low international reserves and those with a history of high inflation rates are most likely to select a floating exchange rate regime.
Publication Name: American Economic Review
Subject: Economics
ISSN: 0002-8282
Year: 1996
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The role of variable input in the relationship between investment and uncertainty
Article Abstract:
Labor's pivotal role in the balance between economic uncertainty and investment is examined.
Publication Name: American Economic Review
Subject: Economics
ISSN: 0002-8282
Year: 2000
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