Investment under uncertainty: The nature of demand shocks and the expected profitability of capital
AbstractThis paper analyses the disparity regarding the sign of the investment–uncertainty relationship in models of investment under symmetric adjustment costs. That sign is determined by the shape of the profit function, which is related to the nature of demand shocks.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 114 (2012)
Issue (Month): 2 ()
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Web page: http://www.elsevier.com/locate/ecolet
Demand uncertainty; Expected profitability of capital; Jensen’s inequality;
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
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