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Exchange Rate Uncertainty and Labour Market Adjustment under Fixed and Flexible Exchange Rates AgEcon
Chen, Yu-Fu; Funke, Michael.
The standard literature on working time has modelled the decisions of firms in a deterministic framework in which firms can choose between employment and overtime (given mandated standard hours). Contrary to this approach, we follow the real options approach, which allows us to investigate the value to a firm of waiting to adjust labour when the firm´s revenues in domestic currency are stochastic and adjustment costs are sunk. The simulations reject the null hypothesis that all exchange rate regimes obey common employment adjustment thresholds.
Tipo: Working or Discussion Paper Palavras-chave: Real Option Theory; Uncertainty; Working Time; Employment; Labour Demand; Exchange Rates; Financial Economics; Labor and Human Capital; D81; E24; J23; F31.
Ano: 2002 URL: http://purl.umn.edu/26287
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Firing Costs: Eurosclerosis or Eurosuccesses? AgEcon
Chen, Yu-Fu; Snower, Dennis; Zoega, Gylfi.
In this paper we analyse the employment implications of firing restrictions. We find that when a recession is expected and the trend rate of productivity growth is small, a rise in firing costs affects mainly the hiring decision. Thus there is a negative effect on average employment. When, on the other hand, a boom is expected and the rate of productivity growth is large, firing costs affect mainly the firing decision. Then, as a result, average employment is increased. Our analysis suggests that while firing restrictions might have stimulated employment and reduced unemployment in Europe in the first two decades following World War II - when large supply shocks were absent and the average rate of growth was high - these same restrictions may have had the...
Tipo: Working or Discussion Paper Palavras-chave: Labor and Human Capital.
Ano: 1999 URL: http://purl.umn.edu/26177
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Option Value, Policy Uncertainty, and the Foreign Direct Investment Decision AgEcon
Chen, Yu-Fu; Funke, Michael.
In this paper we analyse the impact of policy uncertainty on foreign direct investment strategies. The paper follows the real options approach, which allows to investigate the value to a firm of waiting to invest and/or disinvest, when payoffs are stochastic due to political uncertainty and investments are partially reversible. Across the board we find that political uncertainty can be very detrimental to FDI decisions.
Tipo: Working or Discussion Paper Palavras-chave: Real options; Investment; Foreign Direct Investment; Political Uncertainty; International Relations/Trade; D81; D92; E22; F21.
Ano: 2003 URL: http://purl.umn.edu/26373
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