Time to Build and Fluctuations in Bulk Shipping | Zendy

Myrto Kalouptsidi | Zendy

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Time to Build and Fluctuations in Bulk Shipping

Author(s) -

Myrto Kalouptsidi

Publication year - 2014

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.104.2.564

Subject(s) - volatility (finance) , economics , econometrics , investment (military) , estimation , nonparametric statistics , value (mathematics) , constant (computer programming) , microeconomics , monetary economics , computer science , management , machine learning , politics , political science , law , programming language

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.

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