Is the Investment–Uncertainty Relationship Nonlinear? An Empirical Analysis for the Netherlands

Bibliographic Data

ID9722820
AuthorsHong Bo, Bo Hong (0000-0002-8585-1909, University of Groningen), Robert Lensin (University of Nottingham)
Year2005
Volume72
Issue286
Pages307-331
Publication date2005-05-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherWiley (PUBLISHER • GB)
DOI10.1111/j.0013-0427.2005.00416.x
OpenAlexW2137347160
LanguageEN
Citations received2
References cited39

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

Econometrics · Economics · Financial economics · Generalized method of moments · Investment (military) · Nonlinear system · Panel data · Capital Investment and Risk Analysis · Complex Systems and Time Series Analysis · Market Dynamics and Volatility

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