• English
    • svenska
  • English 
    • English
    • svenska
  • Login
View Item 
  •   Home
  • School of Business, Economics and Law / Handelshögskolan
  • Department of Economics / Institutionen för nationalekonomi med statistik
  • Working papers
  • View Item
  •   Home
  • School of Business, Economics and Law / Handelshögskolan
  • Department of Economics / Institutionen för nationalekonomi med statistik
  • Working papers
  • View Item
JavaScript is disabled for your browser. Some features of this site may not work without it.

Pursuing the Wrong Options? Adjustment Costs and the Relationship between Uncertainty and Capital Accumulation

Abstract
Abel and Eberly (1999) show that the effect of uncertainty on long run capital accumulation is ambiguous in a real options model with irreversible investment. We show that a higher level of uncertainty tends to reduce expected capital stock levels in a model with strictly convex adjustment costs. Simulations suggest that this negative impact of uncertainty on cap- ital accumulation may be substantial. We also provide some intuition for this result.
URI
http://hdl.handle.net/2077/22358
Collections
  • Working papers
View/Open
gupea_2077_22358_1.pdf (427.4Kb)
Date
2010-05-17
Author
Bond, Stephen R.
Söderbom, Måns
Wu, Guiying
Keywords
Uncertainty
real options
adjustment costs
capital accumulation
Publication type
report
ISSN
1403-2465
Series/Report no.
Working Papers in Economics
449
Language
eng
Metadata
Show full item record

DSpace software copyright © 2002-2016  DuraSpace
Contact Us | Send Feedback
Theme by 
Atmire NV
 

 

Browse

All of DSpaceCommunities & CollectionsBy Issue DateAuthorsTitlesSubjectsThis CollectionBy Issue DateAuthorsTitlesSubjects

My Account

LoginRegister

DSpace software copyright © 2002-2016  DuraSpace
Contact Us | Send Feedback
Theme by 
Atmire NV