TY - JOUR
T1 - Time-to-build and the inverse U-shape investment-uncertainty relationship
AU - maoz, yishay
N1 - Copyright:
Copyright 2018 Elsevier B.V., All rights reserved.
PY - 2008
Y1 - 2008
N2 - The effect that investment lags have on the uncertainty-investment relationship is studied by modifying the Bar-Ilan and Strange (1996) model to enable an analytical solution. The following results emerge: (i) If the time lag is sufficiently small, uncertainty affects investment negatively; (ii) A sufficiently large time lag gives rise to an inverse U-shape uncertainty-investment relationship; (iii) When such an inverse U-shape exists, the longer the time lag (or the larger the degree of profit convexity), the wider the range of a positive uncertainty-investment relationship.
AB - The effect that investment lags have on the uncertainty-investment relationship is studied by modifying the Bar-Ilan and Strange (1996) model to enable an analytical solution. The following results emerge: (i) If the time lag is sufficiently small, uncertainty affects investment negatively; (ii) A sufficiently large time lag gives rise to an inverse U-shape uncertainty-investment relationship; (iii) When such an inverse U-shape exists, the longer the time lag (or the larger the degree of profit convexity), the wider the range of a positive uncertainty-investment relationship.
KW - Investment
KW - Time to build
KW - Uncertainty
UR - http://www.scopus.com/inward/record.url?scp=43349088325&partnerID=8YFLogxK
U2 - 10.2202/1935-1704.1443
DO - 10.2202/1935-1704.1443
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AN - SCOPUS:43349088325
SN - 1534-5955
VL - 8
JO - B.E. Journal of Theoretical Economics
JF - B.E. Journal of Theoretical Economics
IS - 1
M1 - 11
ER -