theory of the demand for capital and labour, on which most of the econometric models of investment and employment that we …We survey recent microeconometric research on investment and employment that has used panel data on individual firms or … of adjustment, which have played a prominent role especially in the microeconometric literature on investment. With …

: capital investment, hiring, research and development, and advertising. We find that uncertainty depresses capital investment … literature emphasizing that long investment lags create valuable real put options which offset the effects of call options lost … roughly a third of the fall in capital investment and hiring that occurred in 2008-10 …

costs can not explain our empirical results. Surprise increases in uncertainty leads plants to freeze investment and labor … uncertainty increases, more plants adopt a wait-and-see policy for investment. This, in turn, reduces capital through depreciation …