Uncertainty over Business Conditions and Investment (Japanese)

This paper, using data from a representative quarterly business survey in Japan, constructs measures of business uncertainty and presents empirical findings about the movement of uncertainty over future business conditions and its relationship with investment plans. The major results are as follows. First, uncertainty over business conditions was greatly enhanced at the time of the collapse of Lehman Brothers, but the effect of an increase in the consumption tax rate in 2014 on business uncertainty was small. Second, manufacturing and small firms tend to show higher uncertainty over business conditions than non-manufacturing and large firms. Third, we detect evidence of a negative effect of business uncertainty on investment plans. These findings suggest the role of keeping stable macroeconomic conditions and the importance of avoiding unpredictable conduct of economic policies.