Questions tagged [investment]
Regarding the purchasing of capital and productive materials by firms. this differs from saving which is a similar action done by consumers.
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Real option effect of uncertainty - irreversiblity vs fixed cost
There is a growing literature (e.g. Bloom, 2009) studying negative macroeconomic impacts of heightened uncertainty. One channel through which uncertainty can discourage economic activity, and ...
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Does 'ethical investing' have any effect?
Some mutual funds make a point of only investing in ethical companies (eg avoiding arms companies, polluters, human rights violators, etc).
Or other organisations pressure funds to stop investing in ...
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Which capital accumulation is right? $K_t = (1-\delta)K_{t-1} +I_t$ or $K_t = (1-\delta)K_{t-1}+I_{t-1}$?
In a lot of models with capital, I find different variants of capital accumulation formula as follows:
$K_t = (1-\delta)K_{t-1} +I_t$ or
$K_t = (1-\delta)K_{t-1}+I_{t-1}$
Which one is more ...
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Does stock picking work?
Does stock picking work? Why/why not? What does the research say about it?
(I was expecting that this should already have been asked and looked quite extensively for such a question but couldn't find ...
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Why do we consider purchase of house by households as investment?
According to what I have read, investment is the expenditure on creation of capital goods, which means that it is done by producers.
Then why do we treat buying of house by households as investment ...
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What is the difference between a loan and an investment?
IMF, WB, ADB, IDB, AIIB are known to give loans. On the other hand, China is said to be investing in Pakistani project termed as CPEC.
What is the difference between these two terms in these two ...
user13954
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Impact of election outcomes on individual's mood? Behavioral Finance
I am currently working on my thesis in behavioral finance. My topic is about short term stock returns after the elections. One paper ("Sport Sentiments and Stock Returns") proves that the losing ...
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Is over-valuation of a start up genuinely detrimental to the start up's future?
I recently watched S02E01 of Silicon Valley.
In it, having demonstrated a breakthrough algorithm, the guys are pursued by investors with increasing funding offers.
However, the founder is warned ...
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Is investment in real estate a real investment?
In the book The Financial Crisis and the Free Market Cure in chapter 3 author said that investment in real estate is not really investment.
It is jobs that create ...
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What is the difference between present value and face value?
What is the difference between present value and face value?
When I search this question on Google is says they're the same in some cases and different in others. It says they are the same when the ...
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Are stock exchanges market makers?
Are stock exchanges like NASDAQ and NYSE market makers? In other words, are they providing liquidity by pairing individual buyers and sellers with each other in real-time? Or does it work differently?
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Does dollar cost averaging actually have any advantage over one time investment?
Some banks promote savings plans by stating that investing a fixed amount of money in regular time intervals minimizes the average buying price or the downside risk (dollar cost averaging). Since the ...
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Keynes' conception of investment
Keynes defines saving as equal to investment, saying:
"Having now defined both income and consumption, the definition of saving, which is the excess of income over consumption, naturally follows ....
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Is there a theory about investors' behaviour during bubbles?
As far as I can see there are two senses in which it's 'rational' for an investor to buy during a bubble.
The investor has erroneously overvalued the value of the stock/commodity.
The investor is ...
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Does savings lead to investment in physical capital?
In the introductory macroecon textbook I'm reading, it's made clear that savings=investment. Mathematically, this makes sense to me. However, I'm having trouble understanding the qualitative ...
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Relationship between Real Interest Rate and Employment
The country of Kingsland is considering the introduction of a
compulsory retirement saving scheme. Under this scheme all workers are
required to save ten per cent of their annual wages and ...
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How to borrow at risk free rate
When learning about derivatives, we learnt about risk-free hedges and portfolios. However, one of the concepts was about borrowing and lending at the risk free rate. Now, for lending it's as simple as ...
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Scaling Adjustment Costs
Take a cont. diff, convex and increasing cost function $c(X)$. Say you start with a stock $K$, and want to (dis)invest $I$. Many adjustment cost functions (for example, the first example on page 2 ...
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Can't a country grow its GDP without foreign investment?
Whenever various developing countries around the world talk about growing their economies, they talk about facilitating foreign investments and they put so much emphasis on it as if a country's ...
user18806
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Best resources to self-educate myself in economics
I want to learn Economics by myself and I'm looking to build a path with people who're in this field to how and in what order should I learn Economics, I did some research and I've found many ...
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What sort of impact would one expect on investment as a result of an approaching election?
I am looking to observe and possibly quantify private investment during election periods.
I am interested in any studies, particularly empirical, which discuss the impacts elections can have on the ...
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Does salary contribute to GDP under the expenditure approach?
The question really confuses me. On one hand, we can consider the wages as purchasing services from employees. On the other hand, the salary is also part of the cost of the products, thus it isn't &...
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Instrument suggestions for FDI
I am extremely stuck on trying to think of an instrument for the location of FDI within a country. The instrument must be correlated with foreign firms, but not correlated with domestically-owned ...
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Are savings necessary for economic growth?
So, I've had this confusion for a long time. We all know how spending is absolutely vital for economic growth. However, at the same time, are savings necessary too?
My initial opinion was "no". In a ...
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How exactly do Participatory Notes induce volatility into the economy?
I was reading up on participatory notes. Wikipedia defines these as "instruments issued by registered foreign institutional investors (FII) to overseas investors, who wish to invest in the Indian ...
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How do government purchases crowd out the private sector?
I am curious about how government purchases crowd out the private sector (if it does). If we look at a graph of the composition of US GDP, it seems that government purchases and investment are ...
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Screw foreign investment, lets just print money
We often hear of countries securing foreign investment. Stores like this are trumped as major achievements. Foreign investment also has criticisms - profits generated in a country end up going abroad, ...
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Investment = Saving relation in an open economy
I am reading the book Macroeconomics by Olivier Blanchard.
It states that an alternative way of looking at an goods market equilibrium is investment = saving. In an open economy it states the ...
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Capital in a credit frictions model
I won't go into detail of this model because it's really just one point that i'm confused about. This question is based on a model by Matsuyama (2007).
Agents are deciding whether to invest in a ...
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Derive marginal productivity conditions in DW Jorgenson paper
I'm reading Jorgenson, Dale W. (1963), "Capital Theory and Investment Behavior", American Economic Review. Vol 53, No. 2, pp. 247-259. http://www.jstor.org/stable/pdfplus/1823868.pdf
I would like ...
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Savings = investment with private money creation?
I've been reading some introductory macroeconomics and I'm struggling to understand one of the basic accounting identities. In a closed economy with a fixed money supply it's clear that every dollar ...
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Does aggregate demand increase investments?
I just read that increase in aggregate demand increases investment for a given interest rate. How is it possible because when aggregate demand increases, this shifts the demand for money to the right ...
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How does economics cope with production processes that have large lumpy investment requirements?
If seems that all equations (e.g. Price elasticity of supply ) assume that there is a marginal cost of production that is nicely related to the level of output. But clearly you can’t buy half a new ...
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Why FDI stock in the same year is different in the same reports?
From World Investment Report 2003, in 2000, the US has 12.4% GDP as FDI inward stock and 13.2% GDP as FDI outward stock. These numbers are equivalent to 1274720 million USD, and 1356960 million USD. ...
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Bubble and productive investments
Is there some consenus in the literature as to what features characterize a bubble investment as distinct from a productive investment?
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What is the effect of redirecting government tax intake to a consumer retirement saving incentive?
In New Zealand we have a retirement saving scheme called Kiwisaver.
The scheme is opt in. If a consumer opts in, they must save at least 3% of their income, which they can't access until retirement. ...
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Are that models that explain how companies become more efficient?
I'm trying to model/understand the following intuition:
Company makes a product
Product gets sold, company makes a profit
Company does something with the profit to become "better" at what they do: ...
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Correlation and Causality: Data comparison of educational spending and GDP growth
I am interested as to whether or not Educational spending does or does not affect GDP and GDP growth (and as an aside GDP per Capita).
As an overview, I've ranked the countries in each aspect (with 1 ...
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Optimisation of bonds
I'm doing an optimisation problem but don't understand what the terms mean.
Suppose someone wants to invest $110,000.
They have 4 choices as to what they invest their money into:
municipal bond ...
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Is the loan principal ever delivered in pieces over time?
Not sure if this is the right place for this question but it's more of a theoretical finance question than a personal finance question.
So a loan has a principal amount that is given to the borrower ...
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Diagram with axes $r$ and $S,I$
In the figure below, I have a coordinate system where $r$ depends on $I$ or $S$, but I do not completely understand why I can have multiple functions inside this coordinate system.
Why can I write $S(...
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Why does the answer not include increased negative unplanned stock investment?
I will focus on the event "c":
The answer for "c" is following:
A sharp increase in the rate of real GDP growth leads to
a higher level of planned investment spending by producers, according to ...
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If a currency crashes, does that effect the value of rare or collector coins?
I own lots of collectable coins from the 70's (mostly mint dollars and quarters.) Some of my friends are telling me that the US economy is going to crash and the the dollar is going to lose its value....
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Solving a problem using CAPM and capital structure theory
I am given the following problem:
A firm currently owns assets worth $4$ milllion dollars that have a beta of 1. The risk-free interest rate is 10% and the market risk premium is 8%. Suppose the firm ...
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Why do riskier investments pay more?
I'm talking about bonds, stocks, and the sort.
I understand that an individual investor that's planning to invest, say, 50% of his savings, may require a higher expected gain to go for a riskier ...
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Why would males' shorter pension's savings produce more, and not less, income?
Source: The European Union: A Beginner's Guide (1 ed. 2012) by Alasdair Blair.
[p 139:] Gender has traditionally played a key role in the pricing of insurance policies.
In 2004 an EU Directive ...
user4020
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Hypothetical price of a city (e.g. Munich) [closed]
At lunch we pondered, how much a hypothetical investor would have to pay for a whole city.
What would the combined value of all real estate in a large city (like Munich) be?
Is there a way to ...
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Should housing be considered a form of capital for the purpose of capital gains taxation?
Economists across the political spectrum almost unanimously oppose the home mortgage interest tax deduction. While I'm sure there are a few whom I've missed, I could only find a single professional ...
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What does "the world's strongest currency" title mean for investors? [closed]
Kuwaiti Dinar shows up as the most expensive in the world. Does that mean I better invest in KWD (or the safe USD) instead of my home currency (IDR)?
A little background: I am just an ordinary person ...
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What is the relationship between the demand for loanable funds and investment?
If the demand for loanable funds decreases, investment increases because the real interest rate decreases. Isn't that a contradiction, because loanable funds are used for investment, and a decrease in ...
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