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Business Investment (business + investment)
Selected AbstractsBusiness Investment under Uncertainty and Irreversibility,OXONOMICS, Issue 1 2009Article first published online: 9 JUL 200, Domenico Lombardi This article surveys developments in the literature on business investment that have shed light on important aspects of firms' investment behaviour. Recent contributions emphasize the relevance of idiosyncratic factors affecting investment decisions such as the degree of irreversibility and uncertainty, whose interaction may generate an opportunity cost equivalent to the exercise of an option. They add an important dimension to the neoclassical theory of investment in so far as they emphasize cross-sectional differences in optimal investment behavior. The econometric evidence is consistent with the predictions of these models pointing to a slower response of investment to demand shocks at higher levels of uncertainty. [source] How sustainable is the Japanese recovery?ECONOMIC OUTLOOK, Issue 4 2004Article first published online: 14 OCT 200 For nearly two years the Japanese economy has grown significantly faster than commentators expected, raising the question of whether the country has finally broken out of its long economic malaise. This article by Simon Knapp examines recent developments to see whether this recovery is sustainable. It argues that over the last year the recovery has broadened out beyond merely the export sector, although there are good reasons to believe that growth as measured by GDP has been overstated and that many serious structural problems remain. Business investment has surged on the back of rising profitability and an improved labour market has helped lift consumer confidence. At the same time the paper recognises the importance of China's boom in stimulating the Japanese economy over the last two years, and estimates that this factor may have boosted the level of GDP by between 1 to 2%. With Chinese growth now moderating to more sustainable levels, export growth will slow over the next year or so. However, domestic demand should now be strong enough, in the absence of major external shocks, to generate GDP growth of around 1.5 to 2% per annum in the medium term; a respectable figure given the country's falling population. [source] HOUSING AND THE BUSINESS CYCLE*INTERNATIONAL ECONOMIC REVIEW, Issue 3 2005Morris A. Davis In the United States, the percentage standard deviation of residential investment is more than twice that of nonresidential investment. In addition, GDP, consumption, and both types of investment co-move positively. We reproduce these facts in a calibrated multisector growth model where construction, manufacturing, and services are combined, in different proportions, to produce consumption, business investment, and residential structures. New housing requires land in addition to new structures. The model can also account for important features of industry-level data. In particular, hours and output in all industries are positively correlated, and are most volatile in construction. [source] Traditional versus unobserved components methods to forecast quarterly national account aggregatesJOURNAL OF FORECASTING, Issue 2 2007Gustavo A. Marrero Abstract We aim to assess the ability of two alternative forecasting procedures to predict quarterly national account (QNA) aggregates. The application of Box,Jenkins techniques to observed data constitutes the basis of traditional ARIMA and transfer function methods (BJ methods). The alternative procedure exploits the information of unobserved high- and low-frequency components of time series (UC methods). An informal examination of empirical evidence suggests that the relationships between QNA aggregates and coincident indicators are often clearly different for diverse frequencies. Under these circumstances, a Monte Carlo experiment shows that UC methods significantly improve the forecasting accuracy of BJ procedures if coincident indicators play an important role in such predictions. Otherwise (i.e., under univariate procedures), BJ methods tend to be more accurate than the UC alternative, although the differences are small. We illustrate these findings with several applications from the Spanish economy with regard to industrial production, private consumption, business investment and exports.,,Copyright © 2007 John Wiley & Sons, Ltd. [source] The Role of Interbank Markets in Monetary Policy: A Model with RationingJOURNAL OF MONEY, CREDIT AND BANKING, Issue 6 2008XAVIER FREIXAS banking; rationing; monetary policy This paper analyzes the impact of asymmetric information in the interbank market and establishes its crucial role in the microfoundations of the monetary policy transmission mechanism. We show that interbank market imperfections induce an equilibrium with rationing in the credit market. This has two major implications: first, it reconciles the irresponsiveness of business investment to the user cost of capital with the large impact of monetary policy (magnitude effect), and second, it shows that banks' liquidity positions condition their reaction to monetary policy (Kashyap and Stein liquidity effect). [source] Business Investment under Uncertainty and Irreversibility,OXONOMICS, Issue 1 2009Article first published online: 9 JUL 200, Domenico Lombardi This article surveys developments in the literature on business investment that have shed light on important aspects of firms' investment behaviour. Recent contributions emphasize the relevance of idiosyncratic factors affecting investment decisions such as the degree of irreversibility and uncertainty, whose interaction may generate an opportunity cost equivalent to the exercise of an option. They add an important dimension to the neoclassical theory of investment in so far as they emphasize cross-sectional differences in optimal investment behavior. The econometric evidence is consistent with the predictions of these models pointing to a slower response of investment to demand shocks at higher levels of uncertainty. [source] RETURNS TO EQUITY, INVESTMENT AND Q: EVIDENCE FROM THE UKTHE MANCHESTER SCHOOL, Issue 2005SIMON PRICE Conventional wisdom has it that Tobin's Q cannot help explain aggregate investment. However, the standard linearized present-value asset price decomposition suggests that it should be able to predict other variables, such as stock returns. Using a new data set for the UK, we find that Q has strong predictive power for debt accumulation, stock returns and UK business investment. The correctly signed results on both returns and investment appear to be robust, and are supported by the commonly used and bootstrapped standard error corrections, as well as recently developed asymptotic corrections. [source] | ||||||||||