Investment under uncertainty: The nature of demand shocks and the expected profitability of capital

Pedro Gil

Economics Letters, 2012, vol. 114, issue 2, 154-156

Abstract: This paper analyses the disparity regarding the sign of the investment–uncertainty relationship in models of investment under symmetric adjustment costs. That sign is determined by the shape of the profit function, which is related to the nature of demand shocks.

Keywords: Demand uncertainty; Expected profitability of capital; Jensen’s inequality (search for similar items in EconPapers)
JEL-codes: D21 D89 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:114:y:2012:i:2:p:154-156

DOI: 10.1016/j.econlet.2011.10.010

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