Optimal Investment in the Presence of Investment Shock and Congestion
This paper develops a dynamic overlapping-generations model in the presence of investment shocks and aims to understand how social welfare is affected by the investment decision of the firm and by the time of demand of the consumers. By simulating the model, I find that to maximize social welfare a considerable proportion of consumers should postpone their demand. Rational consumers, in fact, react to congestion by shifting their demand to the next period, whenever there is a positive shock affecting the investment function. However, policy-makers should consider policies favouring investment very carefully, since investment affects social welfare via a bell-shaped function.
If you experience problems downloading a file, check if you have the proper application to view it first. 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 164 (2008)
Issue (Month): 2 (June)
|Contact details of provider:|| Web page: https://www.mohr.de/jite|
|Order Information:|| Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany|
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.:
- Russell Cooper & John Haltiwanger & Laura Power, 1995.
"Machine Replacement and the Business Cycle: Lumps and Bumps,"
NBER Working Papers
5260, National Bureau of Economic Research, Inc.
- John Haltiwanger & Russell Cooper & Laura Power, 1999. "Machine Replacement and the Business Cycle: Lumps and Bumps," American Economic Review, American Economic Association, vol. 89(4), pages 921-946, September.
- Russell Cooper & John Haltiwanger & Laura Power, 1995. "Machine Replacement and the Business Cycle: Lumps and Bumps," Papers 0062, Boston University - Industry Studies Programme.
- Jerome Adda & Russell W. Cooper, 2003. "Dynamic Economics: Quantitative Methods and Applications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012014, March.
- Stokey, Nancy L, 1998. "Are There Limits to Growth?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 1-31, February.
- Kwanho Shin & Jaewoo Lee, 2000.
"The Role of a Variable Input in the Relationship between Investment and Uncertainty,"
American Economic Review,
American Economic Association, vol. 90(3), pages 667-680, June.
- Lee, J. & Shin, K., 1997. "The Role of a Variable Input in the Relationship Between Investment and Uncertainty," Papers 97-98-11, California Irvine - School of Social Sciences.
- Lee, J. & Shin, K., 1996. "The Role of a Variable Input in the Relationship Between Investment and Uncertainty," Papers 96-97-08, California Irvine - School of Social Sciences.
When requesting a correction, please mention this item's handle: RePEc:mhr:jinste:urn:sici:0932-4569(200806)164:2_327:oiitpo_2.0.tx_2-2. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Wolpert)
If references are entirely missing, you can add them using this form.