Article Dans Une Revue Journal of Economic Dynamics and Control Année : 2025

News and firm entry: The role of the waiting option

Résumé

Firm entry and capital investment both vary over the business cycle. This paper analyzes the role of the firm entry delay option (waiting option) in the joint dynamics of firm entry and investment in a news-driven RBC model. We introduce the waiting option by restricting the number of potential firm entrants and demonstrate that the combination of news shocks and the waiting option effect yields empirically plausible joint dynamics of firm entry and investment over the business cycle. In contrast, the model without the entry delay option produces excessively volatile firm entry. We rationalize our findings using an analytical real-option model of firm entry.

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Dates et versions

hal-05066974 , version 1 (19-05-2025)

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Anastasiia Antonova, Mykhailo Matvieiev. News and firm entry: The role of the waiting option. Journal of Economic Dynamics and Control, 2025, 171, pp.105034. ⟨10.1016/j.jedc.2024.105034⟩. ⟨hal-05066974⟩
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