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The Influence of Uncertainty on UK Manufacturing Investment

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  • Driver, Ciaran
  • Moreton, David

Abstract

This paper reports the results of including proxies for growth and inflation uncertainty in an accelerator-style investment equation, set up in "error-correction" form, for U.K. manufacturing plant and machinery expenditure. The uncertainty proxies are constructed as cross-section dispersion indices of independent economic forecasts. The results confirm the importance of output growth uncertainty as a (negative) determinant of capital formation. Inflation uncertainty was found to have a short-run influence only. Copyright 1991 by Royal Economic Society.

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 101 (1991)
Issue (Month): 409 (November)
Pages: 1452-59

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Handle: RePEc:ecj:econjl:v:101:y:1991:i:409:p:1452-59

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Cited by:
  1. Klaus Mohn & B�rd Misund, 2011. "Shifting sentiments in firm investment: an application to the oil industry," Applied Financial Economics, Taylor & Francis Journals, vol. 21(7), pages 469-479.
  2. Recalde, Marina, 2011. "Energy policy and energy market performance: The Argentinean case," Energy Policy, Elsevier, vol. 39(6), pages 3860-3868, June.
  3. Demir, FIrat, 2009. "Financial liberalization, private investment and portfolio choice: Financialization of real sectors in emerging markets," Journal of Development Economics, Elsevier, vol. 88(2), pages 314-324, March.
  4. DemIr, FIrat, 2009. "Capital Market Imperfections and Financialization of Real Sectors in Emerging Markets: Private Investment and Cash Flow Relationship Revisited," World Development, Elsevier, vol. 37(5), pages 953-964, May.
  5. Gerald Stuber, 2001. "Implications of Uncertainty about Long-Run Inflation and the Price Level," Working Papers 01-16, Bank of Canada.
  6. Demir, Firat, 2007. "Private Investment, Portfolio Choice and Financialization of Real Sectors in Emerging Markets," MPRA Paper 3835, University Library of Munich, Germany, revised Jul 2007.
  7. Mailand, Wilhelm, 1998. "Zum Einfluß von Unsicherheit auf die gesamtwirtschaftliche Investitionstätigkeit," HWWA Discussion Papers 57, Hamburg Institute of International Economics (HWWA).
  8. Julia Darby & Andrew Hughes Hallett & Jonathan Ireland & Laura Piscitelli, 2000. "Exchange Rate Uncertainty and Business Sector Investment," Econometric Society World Congress 2000 Contributed Papers 0600, Econometric Society.
  9. Mark J. Koetse & Henri L.F. de Groot & Raymond J.G.M. Florax, 2006. "The Impact of Uncertainty on Investment: A Meta-Analysis," Tinbergen Institute Discussion Papers 06-060/3, Tinbergen Institute.
  10. Stephanie Denis & Prakash Kannan, 2013. "The Impact of Uncertainty Shocks on the UK Economy," IMF Working Papers 13/66, International Monetary Fund.
  11. Driver, Ciaran & Whelan, Brendan, 2001. "The effect of business risk on manufacturing investment: Sectoral survey evidence from Ireland," Journal of Economic Behavior & Organization, Elsevier, vol. 44(4), pages 403-412, April.
  12. Li, Yong & Mahoney, Joseph T., 2011. "When are venture capital projects initiated?," Journal of Business Venturing, Elsevier, vol. 26(2), pages 239-254, March.
  13. Demir, Firat, 2006. "Volatility of short term capital flows and socio-political instability in Argentina, Mexico and Turkey," MPRA Paper 1943, University Library of Munich, Germany.
  14. Caruso, Massimo, 2001. "Investment and the persistence of price uncertainty," Research in Economics, Elsevier, vol. 55(2), pages 189-217, June.
  15. repec:asi:ajoerj:2013:p:633-653 is not listed on IDEAS
  16. Demir, Firat, 2007. "Private Investment and Cash Flow Relationship Revisited: Capital Market Imperfections and Financialization of Real Sectors in Emerging Markets," MPRA Paper 3081, University Library of Munich, Germany.
  17. Demir, Firat, 2006. "Volatility of short term capital flows, financial anarchy and private investment in emerging markets," MPRA Paper 3080, University Library of Munich, Germany, revised May 2007.
  18. Guido Fioretti, 2005. "A Model of Primary and Secondary Waves in Investment Cycles," Computational Economics, Society for Computational Economics, vol. 24(4), pages 357-381, June.
  19. Serven, Luis, 1998. "Macroeconomic uncertainty and private investment in developing countries - an empirical investigation," Policy Research Working Paper Series 2035, The World Bank.

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