Does demand and price uncertainty affect Belgian and Spanish corporate investment?
AbstractSeveral recent studies have shown that uncertainty affects investment decisions. Specifically, demand and/or price uncertainty are found to depress corporate investment in e.g. the United States. This paper investigates whether similar results hold for Belgium and Spain, countries where financial markets are less developped and many firms evidently face financial constraints. Uncertainty of demand, output prices and investment prices are measured by the standard deviation of (pre-)filtered Belgian (1984-1992) and Spanish (1983-1993) panel data, and included as explanatory variables in the investment equations derived from a neo-classical model. The results indicate that investment behaviour towards uncertainty differs significantly between low- and high-leveraged firms in both Belgium and Spain.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 23604.
Date of creation: 1997
Date of revision:
corporate investment; uncertainty; neo-classical;
Other versions of this item:
- Marga PEETERS, 2001. "Does Demand and Price Uncertainty affect Belgian and Spanish Corporate Investment?," Discussion Papers (REL - Recherches Economiques de Louvain) 2001031, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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