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The overall effect of volatility on investment

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  • Shih, Pai-Ta
  • Hung, Weifeng

Abstract

We introduce a new channel called random delay effect, through which volatility influences real investment. We show that random delay effect is not negligible in determining the sign of the volatility-investment relationship.

Suggested Citation

  • Shih, Pai-Ta & Hung, Weifeng, 2008. "The overall effect of volatility on investment," Economics Letters, Elsevier, vol. 99(2), pages 324-327, May.
    • Handle: RePEc:eee:ecolet:v:99:y:2008:i:2:p:324-327
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    References listed on IDEAS

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    6. Abel, Andrew B, 1983. "Optimal Investment under Uncertainty," American Economic Review, American Economic Association, vol. 73(1), pages 228-233, March.
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