IDEAS home Printed from https://ideas.repec.org/a/oup/erevae/v37y2010i1p51-76.html
   My bibliography  Save this article

Investment reluctance: irreversibility or imperfect capital markets?

Author

Listed:
  • Silke Hüttel
  • Oliver Mußhoff
  • Martin Odening

Abstract

Low investment rates are a puzzling phenomenon particularly in transition economies with an urgent need for modernisation. The literature offers two alternative explanations: imperfect capital markets and investment reluctance due to real options effects. In this paper, we develop a generalised model that combines both aspects. The econometric implementation has the structure of a generalised Tobit model. Applying this model to German farm-level panel data, we show that ignoring real option effects may lead to erroneous conclusions in the context of empirical investment equations. Oxford University Press and Foundation for the European Review of Agricultural Economics 2010; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Silke Hüttel & Oliver Mußhoff & Martin Odening, 2010. "Investment reluctance: irreversibility or imperfect capital markets?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 37(1), pages 51-76, March.
    • Handle: RePEc:oup:erevae:v:37:y:2010:i:1:p:51-76
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/erae/jbp046
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:erevae:v:37:y:2010:i:1:p:51-76. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/eaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.