Uncertainty and Tobin´s q in a monopolistic competition framework
AbstractThis paper combines the adjustment cost hypothesis of Tobin's q models with Malinvaud's proposition that demand uncertainty matters in explaining investment. Demand uncertainty allows for ex-post excess capacity and leads firms to look at the expeeted excess capacity in deciding about investment. Marginal q is shown to be smaller than average q, the difference being explained by the degree of capacity utilization (DUC).
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Tobin's q; Investment; Monopolistic Competition; Quantity Rationing Model;
Other versions of this item:
- LICANDRO Omar, 1990. "Uncertainty and Tobin’s Q in a Monopolistic Competition Framework," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1990003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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- Sneessens, Henri R., 1987. "Investment and the inflation-unemployment tradeoff in a macroeconomic rationing model with monopolistic competition," European Economic Review, Elsevier, vol. 31(3), pages 781-808, April.
- Portes, Richard, 1987. "Investment and the inflation-unemployment tradeoff in a macroeconomic rationing model with monopolistic competition: By H.R. Sneessens," European Economic Review, Elsevier, vol. 31(3), pages 812-815, April.
- Dreze, Jacques & Bean, Charles R, 1990. " European Unemployment: Lessons from a Multicountry Econometric Study," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(2), pages 135-65.
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- Malinvaud, E., 1987. "Investment and the inflation-unemployment tradeoff in a macroeconomic rationing model with monopolistic competition: By H.R. Sneessens," European Economic Review, Elsevier, vol. 31(3), pages 808-811, April.
- Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
- Lambert, J.-P. & Mulkay, B., 1987. "Investment in a disequilibrium context or does profitability really matter ?," CORE Discussion Papers 1987003, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Philippe MICHEL, 1986. "Dynamique de l'accumulation de capital en présence de contraintes de débouchés," Annales d'Economie et de Statistique, ENSAE, issue 2, pages 117-145.
- Licandro, Omar, .
"Q investment models, factor complementary and monopolistic competition,"
Open Access publications from Universidad Carlos III de Madrid
info:hdl:10016/2794, Universidad Carlos III de Madrid.
- Omar LICANDRO, 1992. "Q Investment Models, Factor Complementarity and Monopolistic Competition," Discussion Papers (REL - Recherches Economiques de Louvain) 1992014, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Rama, Martin, 1990. "Empirical investment equations in developing countries," Policy Research Working Paper Series 563, The World Bank.
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