Finite project life and uncertainty effects on investment

This paper revisits the important result of the real options approach to investment under uncertainty, which states that increased uncertainty raises the value of waiting and thus decelerates investment. Typically in this literature projects are assumed to be perpetual. However, in today's economy firms face a fast-changing technology environment, implying that investment projects are usually considered to have a finite life. The present paper studies investment projects with finite project life, and we find that, in contrast with the existing theory, investments may be accelerated by increased uncertainty. It is shown that this particularly happens at low levels of uncertainty and when project life is short.     

Hat die Einführung der Abgeltungsteuer Aktienkurse beeinflusst?

This paper discusses findings of a current research project whose results indicate that the implementation of the German flat withholding tax on capital gains at the turn of the year 2008–09 led to a temporary but significant increase in trading volumes and share prices on the German stock market. As this capital gains tax reform had already been announced in 2007, corresponding market reactions imply a delayed dissemination of tax information. Hence, our results raise some doubt regarding the information-processing capacity of stock markets. This holds true especially in the following circumstances: 1) extensive trading activities of individual investors with limited information access and attention; 2) a strong focus by a large group of individual investors to a limited number of trading days (herd behaviour); and 3) limited liquidity in the market (e.g. stocks with a small market capitalisation).     

Fiscal Multipliers and Their Relevance in a Currency Union – A Survey

The article reviews the debate on government spending multiplier and provides a detailed discussion of the underlying economic mechanisms, focusing on the role of the state of the business cycle and the monetary policy reaction. Special emphasis is on the effects of fiscal policy within a currency union and its implications for the euro crisis.     

Identifying differences in willingness to pay due to dimensionality in stated choice experiments: a cross country analysis

This paper explores the influence of both cultural and socio-economic characteristics on the perception of complexity and cognitive load associated with stated choice (SC) experiments. Complexity is analysed in terms of five design dimensions which were systematically varied according to a macro experimental design. To study the influence of cross country differences on willingness to pay estimates, we combined datasets collected in Sydney, Santiago de Chile and Taichung city in Taiwan, all of them related to an equivalent route choice experiment. Several mixed logit models were specified and estimated; our results show that design dimensions do have an impact on the behavioural outputs of discrete choice models estimated on SC data. However, these influences seem to be data-specific, suggesting that the impact of design dimensions upon SC outcomes may be local and not necessarily transferable across different countries and cultures.     

Bemessungsgrundlage kontra Fünf-Stufen-Tarif

Die Komplexit?t des deutschen Steuersystems hat in den vergangenen Jahren immer wieder Kritik hervorgerufen und zu verschiedenen Verbesserungsvorschl?gen geführt, von denen jedoch bislang noch keiner ungesetzt wurde. Denn um eine breite politische Akzeptanz zu erlangen, müssen Reformvorschl?ge zum Steuersystem neben Transparenz und Einfachheit gleichzeitig sicherstellen, dass die Einkommensungleichheit nicht versch?rft, das Steueraufkommen insgesamt nicht zu gering wird und die Erwerbsanreize nicht gef?hrdet sind. Durch Steuervereinfachung alleine werden diese Ziele nicht per se erreicht.     

Die deutsche Investitionsschwäche: Die Mär von den Standortproblemen

Seit dem Ende des Dot-Com-Booms 2001 schw?cheln die gesamtwirtschaftlichen Investitionen in Deutschland. Immer wieder wurde dies mit der vermeintlich schwachen Profi tabilit?t von Unternehmensinvestitionen begründet, die durch angebotsorientierte Reformen verbessert werden müsse. Eine disaggregierte Betrachtung weckt allerdings Zweifel an dieser Interpretation. Einiges deutet darauf hin, dass vor allem die schwache Investitionst?tigkeit der ?ffentlichen Hand und die Schw?che beim Wohnungsbau für die Investitionsschw?che insgesamt verantwortlich waren.     

Talking about Films: Word-of-Mouth Behavior and the Network of Success Determinants of Motion Pictures

Recent studies analyze word-of-mouth (WOM) communication as a force that drives the success of motion pictures. The authors build upon that research and integrate measurements of WOM into a broader network of success determinants. Results show that production costs and critics’ evaluation are predictors of WOM volume at the end of the first week. No effect is observed for star power and advertising expenditures. WOM volume at the end of the first week is a major predictor of short-term theatrical box office revenues, which strongly affect long-term revenues. The authors conclude that WOM volume after opening week is positively influenced by WOM volume preceding that week, by advertising expenditures, by critics’ evaluation, by awards, and by length of runtime, but not by short term revenues. Surprisingly, WOM volume after the first week appears to be unrelated to long-term revenues. The authors explore the theoretical and managerial implications of these results.