economic development plans normally contain some policy objectives, especially for the most important macroeconomic variables. governments are expected to take best policies to achieve these objectives, although due to some structural or other impediments they may fail to touch the objectives. we have attempted to uncover the determinants of private consumption and investment as the objectives ...

We study how access to private equity financing affects real firm activities using a broad panel of publicly traded U.S. firms that raise external equity through private placements (PIPEs) between 1995 and 2008. The public firms relying on PIPEs are generally small, high-tech firms that cannot finance investment internally and likely face severe external financing constraints; PIPEs are by far ...

Contrary to most of the papers in the literature of investment under uncertainty we study models that not only capture the timing, but also the size of the investment. We consider a monopoly setting as well as a duopoly setting and compare the results with the standard models in which the firms do not have the capacity choice. Our main results are the following. First, for low uncertainty value...

This paper develops a theory of putty-clay investment under factor price uncertainty using a Brownian motion framework. Ex ante the 4rm faces a choice of technologies that di5er by their relative factor intensities, but ex post technologies are Leontief. The presence of competing technologies and factor price uncertainty can cause delay of pro4table investments for a monopolist 4rm facing a one...

This paper examines irreversible investment in a project with uncertain returns, when there is an advantage to being the first to invest and externalities to investing when others also do so. We show that the possibility of pre-emption can have significant qualitative and quantitative effects on the relationship between uncertainty and investment. In a single-agent real options model, the trigg...

This study provides evidence that managerial incentives, shaped by compensation contracts, help to explain the empirical relationship between uncertainty and investment. We develop a model in which the manager, induced by an incentive contract, makes investment decisions for a firm that faces time-varying volatility. In the model, a manager’s privately optimal investment response to a volatilit...

We investigate the impact of measures of uncertainty on firms’ capital investment behavior using a panel of U.S. firms. Increases in firmspecific and CAPM -based measures have a significant negative effect on investment spending, while market-based uncertainty has a positive impact.

This paper explores the general-equilibrium impact of social security portfolio diversiŽ cation into private securities, either through the trust fund or private accounts. The analysis depends critically on heterogeneities in saving, production, assets, and taxes. Limited diversiŽcation weakly increases interest rates, reduces the expected return on short-term investment (and the equity premium...

This article presents a comparative analysis of possible postponement strategies in a two-stage decision model where firms make three decisions: capacity investment, production (inventory) quantity, and price. Typically, investments are made while the demand curve is uncertain. The strategies differ in the timing of the operational decisions relative to the realization of uncertainty. We show h...