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Business uncertainty and investment: Evidence from Japanese companies

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  • Morikawa, Masayuki

Abstract

This study, using data from a representative quarterly business survey in Japan, constructs measures of business uncertainty, presents empirical findings about the time-series properties of business uncertainty measures, and analyzes the relationship between these measures and investments. The results show, first, that business uncertainty heightened at the time of the collapse of Lehman Brothers, but the effect of an increase in the consumption tax rate on business uncertainty was small. Second, manufacturing and small companies tend to face higher business uncertainty than non-manufacturing and large companies. Third, we detect a negative association between business uncertainty and investments.

Suggested Citation

  • Morikawa, Masayuki, 2016. "Business uncertainty and investment: Evidence from Japanese companies," Journal of Macroeconomics, Elsevier, vol. 49(C), pages 224-236.
    • Handle: RePEc:eee:jmacro:v:49:y:2016:i:c:p:224-236
    DOI: 10.1016/j.jmacro.2016.08.001
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    More about this item

    Keywords

    Uncertainty; Business condition; Prediction error; Investment;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions

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