Investment, irreversibility and financial imperfections: the rush to invest and the option to wait

This file is part of IDEAS, which uses RePEc data

Investment, irreversibility and financial imperfections: the rush to invest and the option to wait

Author Info

Richard Holt () (Economics, University of Edinburgh)

Additional information is available for the following registered author(s):

Richard Holt

Abstract

The impact of combinations of frictions on investment activity is poorly understood. We develop a model of investment under financial frictions and irreversibility. We show that the possibility of encountering financial constraints in future raises irreversible investment today over that arising under irreversibility alone. By contrast, investment under both frictions is lower than under future financial constraints alone.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 5 (2007)
Issue (Month): 10 ()
Pages: 1-10
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:5:y:2007:i:10:p:1-10

Contact details of provider:
Postal: Economics Bulletin, Department of Economics, 414 Calhoun Hall, Vanderbilt University, Nashville TN 37235, USA
Phone: 615-322-2920
Fax: 615-343-8495
Email:
Web page: http://www.economicsbulletin.com

For technical questions regarding this item, or to correct its listing, contact: (John Conley).

Find related papers by JEL classification:
E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
D9 - Microeconomics - - Intertemporal Choice and Growth

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Holt, Richard W. P., 2003. "Investment and dividends under irreversibility and financial constraints," Journal of Economic Dynamics and Control, Elsevier, vol. 27(3), pages 467-502, January. [Downloadable!] (restricted)
Other versions:
- Richard Holt, 2004. "Investment and Dividends under Irreversibility and Financial Constraints," ESE Discussion Papers 55, Edinburgh School of Economics, University of Edinburgh. [Downloadable!]
R. Glenn Hubbard, 1998. "Capital-Market Imperfections and Investment," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 193-225, March. [Downloadable!] (restricted)
Other versions:
- R. Glenn Hubbard, 1997. "Capital-Market Imperfections and Investment," NBER Working Papers 5996, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Andrew B. Abel & Avinash K. Dixit & Janice B. Eberly & Robert S. Pindyck, . "Options, the Value of Capital, and Investment," Rodney L. White Center for Financial Research Working Papers 15-95, Wharton School Rodney L. White Center for Financial Research.
Other versions:
- Andrew B. Abel & Avinash K. Dixit & Janice C. Eberly & Robert S. Pindyck, 1996. "Options, the Value of Capital, and Investment," NBER Working Papers 5227, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Abel, Andrew B., 1952-, 1995. "Options, the value of capital, and investment," Working papers 3843-95., Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
- Andrew B. Abel & Avinash Dixit & Janice C. Eberly & Robert S. Pindyck, 1996. "Options, the Value of Capital, and Investment," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 753-77, August. [Downloadable!] (restricted)
Carruth, Alan & Dickerson, Andrew & Henley, Andrew, 2000. " What Do We Know about Investment under Uncertainty?," Journal of Economic Surveys, Blackwell Publishing, vol. 14(2), pages 119-53, April. [Downloadable!] (restricted)
Other versions:
- Alan Carruth & Andy Dickerson & Andrew Henley, 1998. "What Do We Know About Investment Under Uncertainty?," Studies in Economics 9804, Department of Economics, University of Kent. [Downloadable!]
Andrea Caggese, 2003. "Financing Constraints, Irreversibility, and Investment Dynamics," FMG Discussion Papers dp440, Financial Markets Group. [Downloadable!] (restricted)
Other versions:
- Andrea Caggese, 2001. "Financing Constraints, Irreversibility, and Investment Dynamics," Economics Working Papers 1008, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 2006. [Downloadable!]
- Caggese, Andrea, 2007. "Financing constraints, irreversibility, and investment dynamics," Journal of Monetary Economics, Elsevier, vol. 54(7), pages 2102-2130, October. [Downloadable!] (restricted)

Full references

Statistics
Access and download statistics

Did you know? You can create your own reading lists on IDEAS.

This page was last updated on 2009-12-12.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.