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Time to build and fluctuations in bulk shipping

Author(s): Kalouptsidi, Myrto

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Abstract: This paper explores the nature of fluctuations in world bulk shipping by quantifying the impact of time to build and demand uncertainty on investment and prices. We examine the impact of both construction lags and their lengthening in periods of high investment activity, by constructing a dynamic model of ship entry and exit. A rich dataset of secondhand ship sales allows for a new estimation strategy: resale prices provide direct information on value functions and allow their nonparametric estimation. We find that moving from time-varying to constant to no time to build reduces prices, while significantly increasing both the level and volatility of investment. Copyright © 2014 by the American Economic Association.
Publication Date: Feb-2014
Citation: Kalouptsidi, M. (2014). Time to build and fluctuations in bulk shipping. American Economic Review, 104 (2), 564 - 608. doi:10.1257/aer.104.2.564
DOI: doi:10.1257/aer.104.2.564
ISSN: 0002-8282
Pages: 564 - 608
Type of Material: Journal Article
Journal/Proceeding Title: American Economic Review
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

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