Investment in Greek Manufacturing under Irreversibility and Uncertainty: The Message in Used Capital Expenditures

Konstantinos Dimitrios Drakos (1) , Eleftherios Goulas (2)

1 Economics
2 Economics

This paper contributes to the existing literature by showing that uncertainty produces a non-uniform impact to the extent that different types of capital goods exhibit heterogeneous irreversibility, which we define as asset-specific irreversibility. Hence, asset-specific irreversibility is responsible for asymmetries in responses across types of capital goods to uncertainty. We also show that for a given type of capital good, uncertainty produces a variety of responses across sectors, which we define sector-specific irreversibility. In other words, sectoral differences in terms of the ability to substitute a given type of capital with labour, introduce a second-order effect of uncertainty on investment.

Mots clés: Social Sciences & Humanities

Konstantinos Dimitrios Drakos, Eleftherios Goulas. Investment in Greek Manufacturing under Irreversibility and Uncertainty: The Message in Used Capital Expenditures. Applied Economics, 2010, 42 (14), pp.1797-1809. ⟨10.1080/00036840701736040⟩. ⟨hal-00599233⟩