{
  "title": "Investment, Uncertainty, and Irreversibility in Ghana",
  "publication": "IMF Working Papers, December 1, 1997",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/investment-uncertainty-and-irreversibility-in-ghana-2447",
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  "summary": "Panel data on Ghanaian manufacturing firms are used to test predictions from models of irreversible investment under uncertainty.",
  "sections": [
    {
      "heading": "Research question and data",
      "content": "- Panel data on Ghanaian manufacturing firms are used to test predictions from models of irreversible investment under uncertainty.\n- Information on the entrepreneur’s subjective probability distribution over future demand for the firm’s products is used to construct the expected variance of demand, which is used as a measure of uncertainty.\n- Sample and publication details:\n  - Pages: 37\n  - Volume: 1997\n  - Issue: 169\n  - Series: Working Paper No. 1997/169\n  - DOI: https://doi.org/10.5089/9781451858303.001\n  - Stock No: WPIEA1691997\n  - ISBN: 9781451858303\n  - ISSN: 1018-5941\n  - Author: Catherine A Pattillo\n  - Date: December 1, 1997"
    },
    {
      "heading": "Key empirical findings",
      "content": "- Firms wait to invest until the marginal revenue product of capital reaches a firm-specific hurdle level.\n- Higher uncertainty raises the hurdle level that triggers investment.\n- Uncertainty has a negative effect on investment levels that is greater for firms with more irreversible investment.\n- Expected variance of demand (constructed from entrepreneurs’ subjective probability distributions) is used as the primary measure of uncertainty."
    },
    {
      "heading": "Methods and technical approach",
      "content": "- Use of firm-level panel data from Ghanaian manufacturing firms.\n- Construction of an uncertainty variable from entrepreneurs’ subjective probability distributions over future demand.\n- Empirical testing of predictions from irreversible investment models, including analysis of investment triggers/hurdle levels.\n- Probit models and other econometric analyses are referenced in Subjects/Keywords."
    },
    {
      "heading": "Subjects and keywords (as provided)",
      "content": "- Subjects: Capital adequacy requirements, Econometric analysis, Economic sectors, Financial institutions, Financial regulation and supervision, Manufacturing, National accounts, Private investment, Probit models, Stocks\n- Keywords: Capital adequacy requirements, capital stock, cost of capital, firm investment model, firm owner, Ghana, hurdle level, investment, investment trigger, irreversible, Manufacturing, Private investment, Probit models, Stocks, uncertainty, uncertainty variable, WP"
    },
    {
      "heading": "Publication and access notes",
      "content": "- Also published in Staff Papers, Vol. 45, No. 3, September 1998.\n- Available via the IMF eLibrary (formats and download options listed on the original page).\n\nInvestment, Uncertainty, and Irreversibility in Ghana — Catherine A Pattillo, December 1, 1997 (IMF Working Paper No. 1997/169; DOI: https://doi.org/10.5089/9781451858303.001).\n\n---\n\n Content in this bundle\n\n- Investment, Uncertainty, and Ireversibility in Ghana - WP/97/169\n  - Investment, Uncertainty, and Ireversibility in Ghana - WP/97/169 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Investment, Uncertainty, and Ireversibility in Ghana - WP/97/169 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/investment-uncertainty-and-irreversibility-in-ghana-2447"
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    "Authors: Catherine A Pattillo",
    "Published: December 1, 1997",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451858303.001",
    "Panel data on Ghanaian manufacturing firms are used to test predictions from models of irreversible investment under uncertainty.",
    "Information on the entrepreneur’s subjective probability distribution over future demand for the firm’s products is used to construct the expected variance of demand, which is used as a measure of uncertainty.",
    "Sample and publication details:",
    "Firms wait to invest until the marginal revenue product of capital reaches a firm-specific hurdle level.",
    "Higher uncertainty raises the hurdle level that triggers investment.",
    "Uncertainty has a negative effect on investment levels that is greater for firms with more irreversible investment.",
    "Expected variance of demand (constructed from entrepreneurs’ subjective probability distributions) is used as the primary measure of uncertainty.",
    "Use of firm-level panel data from Ghanaian manufacturing firms.",
    "Construction of an uncertainty variable from entrepreneurs’ subjective probability distributions over future demand.",
    "Empirical testing of predictions from irreversible investment models, including analysis of investment triggers/hurdle levels.",
    "Probit models and other econometric analyses are referenced in Subjects/Keywords.",
    "Subjects: Capital adequacy requirements, Econometric analysis, Economic sectors, Financial institutions, Financial regulation and supervision, Manufacturing, National accounts, Private investment, Probit models, Stocks",
    "Keywords: Capital adequacy requirements, capital stock, cost of capital, firm investment model, firm owner, Ghana, hurdle level, investment, investment trigger, irreversible, Manufacturing, Private investment, Probit models, Stocks, uncertainty, uncertainty variable, WP",
    "Also published in Staff Papers, Vol. 45, No. 3, September 1998.",
    "Available via the IMF eLibrary (formats and download options listed on the original page).",
    "**Investment, Uncertainty, and Ireversibility in Ghana - WP/97/169**"
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