Arbeitspapier

Exchange rate uncertainty and firm investment plans: Evidence from Swiss survey data

A sudden change in monetary policy happened in Switzerland on January 15th, 2015. The Swiss National Bank removed a lower exchange rate bound vis-à-vis the Euro. This unexpected change of regime induced a temporary uncertainty about future prices in foreign markets. We believe that this hampers firm investment in the short term. Using this change in monetary policy as a natural experiment and exploiting the continuous nature of a micro-level business tendency survey, we identify the source of uncertainty and disentangle first and second moment effects. We find that price uncertainty affects investment in equipment and machinery through real option effects and believe that growth option effects positively influences expenditures in research and development. We show that focusing on aggregate gross fixed capital formation masks important insights and suggest the use of disaggregated investment data to deepen our knowledge on the relationship between uncertainty and investment.

Sprache
Englisch

Erschienen in
Series: KOF Working Papers ; No. 400

Klassifikation
Wirtschaft
Criteria for Decision-Making under Risk and Uncertainty
Expectations; Speculations
Investment; Capital; Intangible Capital; Capacity
Thema
investment
uncertainty
irreversibility
Switzerland

Ereignis
Geistige Schöpfung
(wer)
Binding, Garret
Dibiasi, Andreas
Ereignis
Veröffentlichung
(wer)
ETH Zurich, KOF Swiss Economic Institute
(wo)
Zurich
(wann)
2016

DOI
doi:10.3929/ethz-a-010691509
Handle
Letzte Aktualisierung
10.03.2025, 11:41 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Binding, Garret
  • Dibiasi, Andreas
  • ETH Zurich, KOF Swiss Economic Institute

Entstanden

  • 2016

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