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Trigger values for (non-)residential structures and equipment investment

Published online by Cambridge University Press:  17 August 2016

Marga Peeters
Marga Peeters*
Affiliation:
Economeric Research and Special Studies Department, De Nederlandsche Bank, Amsterdam
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Summary

Trigger values are derived for investment projects that are affected by uncertainty and construction periods. The importance of both aspects on the decision to invest is shown by simulation results and empirically corroborated by estimation results obtained with national (non-)residential structures and equipment data. The main conclusion is that time-to-build projects faced with uncertainty, like non-residential structures, are disproportionally more affected than projects that do not have either of these aspects.

Résumé

Résumé

Dans cet article, les valeurs limites de rentabilité, pour des projets d'investissement qui sont affectés et par les périodes de construction et par l'incertitude, sont dérivées. L'importance des ces deux aspects sur la décision d'investir est démontré par des résultats de simulation et est corroboré empiriquement par les résultats obtenus lors de l'estimation sur des données nationales (non-)résidentielles de structure et d'équipement. La conclusion principale est que des projets confrontés à un timing de construction et à de l'incertitude sont beaucoup plus affectés que des projets n'ayant pas ces sensibilités.

Keywords

E22G31C32E22G31C32
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 63 , Issue 2 , 1997 , pp. 171 - 200
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1997 

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Footnotes

(*)

This paper was written when I was a research fellow at the Université Catholique de Louvain. For financial support I gratefully acknowledge the Economics Department in Louvain-La-Neuve and a HCM-grant of the European Community at the University of Warwick. For comments on this paper I want to thank an anonymous referee, Pierre Mella-Barral, Paul Ghijsen and Ramón Ruiz Tamarit.

References

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