Investment and Uncertainty: A Theory-Based Empirical Approach

Arbeitspapier

This paper provides empirical evidence on the dynamic effects of uncertainty on firm-level capital accumulation. A novelty in this paper is that the firm-level uncertainty indicator is motivated and derived from a theoretical model, the neoclassical investment model with time to build. This model also serves as the base for the empirical work, where an error-correction approach is employed. I find a negative effect of uncertainty on capital accumulation, both in the short and the long run. This outcome cannot be explained by the model alone. Instead, the results suggest that the predominant mechanism at work stems from irreversibility constraints.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2004:17

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; Firm Behavior: Theory ; Information, Knowledge, and Uncertainty: General ; Investment; Capital; Intangible Capital; Capacity
• Subject: Investment ; Uncertainty ; Dynamic Panel Data Models ; Geldpolitik ; Regelbindung ; Zins ; Preisrigidität ; Taylor-Regel ; Theorie ; Gleichgewicht

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Carlsson, Mikael
• Event: Veröffentlichung
• (who): Uppsala University, Department of Economics
• (where): Uppsala
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/82683
• Last update: 10.03.2025, 11:43 AM CET