The State Value

Résumé

Abstract This paper considers the state value using the real option approach. Our model allows adding unlimited number of factors which affects the state value. We adjusted Ornstein-Uhlenbeck stochastic process to be able to consider unlimited number of pricing factors to calculate the state value. We think this model may be useful to evaluate the performance of the government and making decision process via knowing the optimal value and the optimal time for the decision. This dynamic model differs from the traditional pricing model for evaluating the nation's wealth using the discounted cash flow model (DCF) which does not allows considering the market condition via using the risk-neutral approach. The states value determinants are divided into two classes, determinants and sub-determinants.

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