We develop a model of capital accumulation in an open economy that imports investment goods from large foreign firms … with a Generalized Euler Equation. We use this optimality condition to analyze the joint evolution of investment, prices …, and markups. The markup on investment goods decreases as the economy accumulates capital toward its steady state …

, firm-specific measure of uncertainty on firm investment and employment growth in the European Union. We find that … uncertainty has an economically significant negative effect on investment. Uncertainty is found to have an economically … significant negative effect on employment growth, as well. Firms perceiving uncertainty as a major investment impediment …