[PDF] Inflation Uncertainty And Capital Investment eBook

Author : Francois Trahan
Publisher : John Wiley & Sons
Page : 228 pages
File Size : 27,7 MB
Release : 2011-07-13
Category : Business & Economics
ISBN : 1118134095

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Macroeconomic Investment Strategies for an Era of Economic Uncertainty “Over the years, François’ insightful analyses of the business cycle has led to market calls that have both benefitted investors on the upside and (more important to many) protected them from losses on the downside. François’ incredible track record in successfully interpreting the trends that can be found in leading indicators and other macroeconomic data have also led to his well deserved reputation as an expert in sector rotation - providing investors on both the long and short side of the market opportunities to profit from his ideas. In my opinion, his most important and influential macro prediction to date was his call in the middle of the last decade when he predicted that the worst housing crisis in American history would soon be upon us, and that it would have far-ranging implications for both the global economy and world financial markets.”

Author : Mr.Eduardo Levy Yeyati
Publisher : International Monetary Fund
Page : 32 pages
File Size : 26,32 MB
Release : 1996-09-01
Category : Business & Economics
ISBN : 1451947577

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The paper presents a model of irreversible investment under uncertainty, where investment takes place whenever a threshold level of marginal returns is reached. The threshold depends positively on price volatility; a change from high to low inflation induces an upward capital stock adjustment. In economies that move in and out of temporary stabilizations, the observed effect is a negative inflation-investment correlation that replicates previous empirical findings, due to purely short-term dynamics. I study how this correlation is affected by the expected duration of each regime. Empirical evidence from ten inflationary economies confirms the predictions of the model.

Author : Carliss Y. Baldwin
Publisher : Forgotten Books
Page : 26 pages
File Size : 26,93 MB
Release : 2018-02-25
Category : Business & Economics
ISBN : 9780666315342

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Excerpt from Inflation, Uncertainty, and Investment This paper considers the effects of inflation, interest rates and uncertainty on a firm's choice between assets of different lives. We first focus on the impact of inflation and interest rates on the value of nominal depreciation tax shields. We find that the effect of an inflation-induced increase in nominal interest rates on the breakeven prices of short and long-lived assets is not monotonic. At low initial nominal interest rates, an increase in the interest rate increases the maximum price that the firm is willing to pay for the short-lived asset relative to the long-lived asset. At some point, the effect reverses so that a further increase in interest rates reduces the maximum or breakeven price of the short-lived asset. Simulation results indicate that these changes occur at rates that are within the range of recent u.s. Experience, 52 to 202. Second, we focus on the impact of relative price uncertainty on the decision to choose a short or long-lived asset. We find that uncertainty increases the breakeven price of shorter-lived assets: in other words, given uncertainty about future relative prices, short-lived assets will be chosen over long - lived assets at higher prices than under certainty. The change in the breakdown price occurs because both long and short-lived assets have a valuable switching option. The Option is more valuable for short-lived assets because the opportunity to switch occurs sooner. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.

Author : Robert K. Dixit
Publisher : Princeton University Press
Page : 484 pages
File Size : 36,96 MB
Release : 2012-07-14
Category : Business & Economics
ISBN : 1400830176

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How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment failed to explain the behavior of investment spending in the United States and other countries? In this book, Avinash Dixit and Robert Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made. In so doing, they answer important questions about investment decisions and the behavior of investment spending. This new approach to investment recognizes the option value of waiting for better (but never complete) information. It exploits an analogy with the theory of options in financial markets, which permits a much richer dynamic framework than was possible with the traditional theory of investment. The authors present the new theory in a clear and systematic way, and consolidate, synthesize, and extend the various strands of research that have come out of the theory. Their book shows the importance of the theory for understanding investment behavior of firms; develops the implications of this theory for industry dynamics and for government policy concerning investment; and shows how the theory can be applied to specific industries and to a wide variety of business problems.

Author : Jaime Gil-Aluja
Publisher : Springer Science & Business Media
Page : 459 pages
File Size : 35,11 MB
Release : 2012-12-06
Category : Business & Economics
ISBN : 9401153280

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FIRST PART Preparation of the Investment 1. Investments in the Company 19 The decline of stability . . 19 The change in direction of studies on the investment process. 25 Basic elements for arithmetical study of selection 29 Thc study of selection from non-numerical elements. 37 2. Programming Investment Activity 49 Classical programming techniques. 49 Handling of an investment programme. 56 Incorporation of costs into investment projects . . . . . . . . . . . . . . . . . . 66 Estimating financial needs throughout the process. 72 3. Financial Risk of Investment 85 Financial aspects of the investment process. 85 Determination of the financial capacity of the investment . . 89 From pre-diagnosis to diagnosis. 102 Numerical determination of the financial risk of an investment. 106 4. Analysis of financial products for the investment 113 Aspects prior to product analysis. 113 Analysis by means of the clan concept . . . . . . . . . . . . . . . . . . . 117 Obtaining affinities and thc use of codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Grouping the characteristics of the products by means of the Moore closing. 126 From product grouping to affinities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 10 / Index SECOND PART Selection 5. A first approximation to selection models 145 Updating of monetary currents 145 Incorporation of the lack of precision of interests rates . . . . . . . . . . . . . . . . 153 The hypothesis of known net values and fuzzy rate of interest . . . . . . 157 6. Selection of investments in an economy with inflation 165 Estimate of monetary currents at constant prices . . . . . . . . . . . . . . . . . . . 165 Estimate of monetary currents at prices for each period . . . . . . . 172 The hypothesis of different rates of inflation . . . . 180 7.