Natural Capital Investment under Knightian Uncertainty

著者
Takao Asano and Akihisa Shibata
シリーズ
MQ Discussion Series
DP番号
2013-010
公開年月
October, 2013
言語
英語
URL
ファイル
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Summary

This paper develops a simple two-period model of natural capital investment under Knightian uncertainty and analyzes how changes in the degree of ambiguity affect the optimal natural capital investment. We find that the degree of Knightian uncertainty affects a government’s natural capital investment. Moreover, we find that the direction of the effect of the Knightian uncertainty depends on the nature of the uncertainty, that is, on whether the uncertainty is about the future level of natural capital or about the return from saving.

 
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