Publications

Detailed Information

Time to build and the real-options channel of residential investment

Cited 9 time in Web of Science Cited 9 time in Scopus
Authors

Oh, Hyunseung; Yoon, Chamna

Issue Date
2020-01
Publisher
Elsevier BV
Citation
Journal of Financial Economics, Vol.135 No.1, pp.255-269
Abstract
A standard real-options model predicts that time-to-build investment could be delayed by uncertainty over future revenue. We quantify the first-order importance of this mechanism in the 2002-2011 housing boom-bust cycle by developing and estimating a model of sequential irreversible investment with stochastic bottlenecks. We find that the main driver of construction delays during the boom is construction bottlenecks. However, further delay in construction during the bust is caused by an increase in uncertainty, which grew by 21.6% between 2002 and 2009. The model can account for more than one-third of the decline in residential investment between 2002 and 2009. (C) 2019 Elsevier B.V. All rights reserved.
ISSN
0304-405X
URI
https://hdl.handle.net/10371/200338
DOI
https://doi.org/10.1016/j.jfineco.2018.10.019
Files in This Item:
There are no files associated with this item.
Appears in Collections:

Related Researcher

Research Area Labor Economics, Public Economics, Urban Economics

Altmetrics

Item View & Download Count

  • mendeley

Items in S-Space are protected by copyright, with all rights reserved, unless otherwise indicated.

Share