Public Investment under Different Sources of Uncertainty

Mario Menegatti

Rivista di Politica Economica, 2006, vol. 96, issue 2, 247-276

Abstract: This paper examines in a unified framework the effects on public investment decisions of different sources of uncertainty and the consequences of uncertainty variability over time. The analysis shows that uncertainty about investment benefits, future consumption and input costs has respectively negative, positive and ambiguous effects on the probability of implementing a project. When uncertainty variability over time is allowed, a rule is found to determine the optimal investment decision both when the path of uncertainty is completely known and when it is just presumed.

JEL-codes: D81 H43 (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:rpo:ripoec:v:96:y:2006:i:2:p:247-276

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