The Effect of Uncertainty on Investment: Some Stylized Facts.
The theoretical relationship between investment and uncertainty is ambiguous. This paper briefly surveys the insights that theory has to offer and then runs a series of simple tests aimed at evaluating the empirical significance of various theoretical effects. The authors' results from a panel of U.S. manufacturing firms indicate a negative effect of uncertainty on investment consistent with theories of irreversible investment. They find no evidence for a positive effect via the channel of the convexity of the marginal product of capital and find no evidence for the presence of a CAPM-based effect of risk. Copyright 1996 by Ohio State University Press.
Year of publication: |
1996
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Authors: | Leahy, John V ; Whited, Toni M |
Published in: |
Journal of Money, Credit and Banking. - Blackwell Publishing. - Vol. 28.1996, 1, p. 64-83
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Publisher: |
Blackwell Publishing |
Saved in:
Online Resource
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