Oil Price Shocks, Firm Uncertainty, And Investment
AbstractIt is found that an oil price shock in interaction with a firmâs stock price volatility has a ânegative effect on investment by that firm, both in the short and long-term. In the presence of âthis interaction term, linear variables in oil price shocks are not statistically significant. There is âevidence that for the short-term effects of the interaction variable, the particular magnitude of an âoil price shock may not be as important as the fact that there is an oil price shock. For the long-âterm effects, however, the magnitude of the oil price shock does matter. Over a longer horizon, âoil price shocks depress investment more at firms facing greater uncertainty. An increase in firm âstock price volatility continues to reduce the link between sales growth and investment in the âpresence of oil price shocks as in Bloom et al. (2007).â
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Macroeconomic Dynamics.
Volume (Year): 15 (2011)
Issue (Month): S3 (November)
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Other versions of this item:
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
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