Long-run Investment under Uncertain Demand
| dc.creator | Di Corato, Luca | |
| dc.creator | Moretto, Michele | |
| dc.creator | Vergalli, Sergio | |
| dc.date | 2017-04-01T19:18:29Z | |
| dc.date.accessioned | 2026-07-09T07:24:55Z | |
| dc.description | In the literature investigating the impact of uncertainty on short-run and long-run investment, most authors have used a log linear profit function. This functional form has been generally considered a reasonable approximation for more general ones and has the advantage of providing closed form solutions for both short-run investment rule and long-run rate of capital accumulation. In this paper, we consider a firm facing a linear demand function with additive shocks and present a technique for the analytical approximation of the long-run average rate of capital accumulation for the case of an inverted U-shape profit function. We then compare the long-run rates of capital accumulation calculated under both assumptions within a plausible range of parameter values. We notice significant differences and conclude that the choice of a log linear functional form has a non-trivial impact on the magnitude of the long run rate of capital accumulation. | |
| dc.identifier | doi:10.22004/ag.econ.156574 | |
| dc.identifier | https://ageconsearch.umn.edu/record/156574/files/NDL2013-065.pdf | |
| dc.identifier | http://ageconsearch.umn.edu/record/156574 | |
| dc.identifier.uri | http://hdl.handle.net/123456789/588058 | |
| dc.language | eng | |
| dc.publisher | ||
| dc.source | http://ageconsearch.umn.edu/record/156574 | |
| dc.title | Long-run Investment under Uncertain Demand | |
| dc.type | Text |