Yosef Bonaparte

1 month ago | sciencedirect.com | Yosef Bonaparte |Jeremy Page |Huy Hoang |Dung Tran

The theoretical framework of ‘investment under uncertainty’ has highlighted the properties of irreversibility as one of the major drivers of capital investment decisions (Bernanke, 1983, Dixit and Pindyck, 1994). Bernanke’s (1983) ‘bad-news’ principle posits that long-term capital investment projects are characterized by some degree of irreversibility, hence, an increase in economic uncertainty can cause a delay in capital investment.