This paper proposes a simple model that formalizes a variant of Ohanian's (2001) conjecture explaining the productivity declines observed in the Great Depression. If a large payment shock like an asset-price collapse renders many firms insolvent, other economic agents become exposed to a higher risk of not being paid (payment uncertainty). The payment uncertainty causes endogenous disruptions o...

The theory of real options is used to incorporate the influence of uncertainty on demographic decision-making. The decision to have children is formulated as an investment using portfolio theory. The timing of the decision to have a child is modelled as a real options decision, with uncertainty affecting a woman’s ability to exercise the doption to waitT in order to delay or space births. An in...

Asymmetric awareness of the contracting parties regarding the uncertainty surrounding them is proposed as a reason for incompleteness in contractual forms. An insurance problem is studied between a risk neutral insurer, who has superior awareness regarding the nature of the uncertainty, and a risk averse insuree, who cannot foresee all the relevant contingencies. The insurer can mention in a co...

Interval uncertainty affects our decision making activities on a daily basis making the data structure of intervals of real numbers more and more popular in theoretical models and related software applications. To model economic and OR situations with interval data as cooperative interval games is often an easy task. To handle cooperative interval games various solution concepts of selection-ty...

The paper examines an R&D model with uncertainty from the population growth, which is a stochastic cooperative Lotka-Volterra system, and obtains a sufficiently condition for the existence of the globally positive solution. The long-run growth rate of the economic system is ultimately bounded in mean and fluctuation of its growth will not be faster than the polynomial growth. When uncertainty o...

A partially informed expert, A, strategically transmits information to a principal, P. The residual uncertainty faced by the expert effectively causes the bias between P and A to be random, with two consequences. First, by misreporting, A is likely to induce a decision choice by P, after the resolution of the residual uncertainty, that is either close to A’s ideal position or too far from it, w...

In this paper we examine the effects of two types of “induced uncertainty”, model uncertainty due to robustness (RB) and state uncertainty due to finite information-processing capacity (called rational inattention or RI), on consumption and the current account. We show that the combination of RB and RI improves the model’s predictions for (i) the contemporaneous correlation between the current ...

We provide a strategic rationale for growth options under uncertainty and imperfect competition. In a market with strategic competition, investment confers a greater capability to take advantage of future growth opportunities. This strategic advantage leads to the capture of a greater share of the market, either by dissuading entry or by inducing competitors to 'make room' for the stronger comp...

We build a new empirical model to estimate the global impact of an increase in volatility US monetary policy shocks. Specifically, we admit time-varying variances local structural shocks from stochastic specification. By allowing for rich dynamic interaction between endogenous variables and setting, find that interest rate uncertainty not only drives output inflation volatility, but also causes...

exchange rate and national income of countries trading with each other are among the most important factors affecting each country's trade. considering the political and economic ties between iran and venezuela in recent years, the goal of this paper was to investigate the effect of exchange rate volatility on exports of iran to venezuela. data used in this research include annual data for...