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Is the investment-uncertainty relationship non-linear? : an emperical [i.e. empirical] analysis for the Netherlands

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  • Bo, H.
  • Lensink, R.

    (Groningen University)

Abstract

We examine the investment-uncertainty relationship for a panel of Dutch manufacturing firms. The system generalised method of moments (GMM) estimates suggests that the effect of uncertainty on investment is non-linear: for low levels of uncertainty an increase in uncertainty has a positive effect on investment, whereas 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 demonstrated empirically.

Suggested Citation

  • Bo, H. & Lensink, R., 2000. "Is the investment-uncertainty relationship non-linear? : an emperical [i.e. empirical] analysis for the Netherlands," Research Report 00E44, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    • Handle: RePEc:gro:rugsom:00e44
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