Is the Investment-Uncertainty Relationship Nonlinear? An Empirical Analysis for the Netherlands
We examine the investment-uncertainty relationship for a panel of Dutch non-financial firms. The system generalized method of moments (GMM) estimates suggest that the effect of uncertainty on investment is nonlinear: for low levels of uncertainty an increase in uncertainty has a positive effect on investment, while for high levels of uncertainty an increase in uncertainty lowers investment. This result is in line with a number of theoretical studies, but has never been documented empirically. Copyright (c) The London School of Economics and Political Science 2005.
Year of publication: |
2005
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Authors: | Bo, Hong ; Lensin, Robert |
Published in: |
Economica. - London School of Economics (LSE). - Vol. 72.2005, 286, p. 307-331
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Publisher: |
London School of Economics (LSE) |
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