| Hjalmar Boehm, Universitaet Hamburg Michael Funke, Universitaet Hamburg Nikolaus A. Siegfried, Universitaet Hamburg |
| Discovering the Link Between Uncertainty and Investment - Microeconometric Evidence from Germany |
| Session: C-9-22 Monday 14 August 2000 by Funke, Michael |
| We analyse empirically the effect of uncertainty on the investment decisions of a sample of quoted German firms. The uncertainty measures are constructed by employing two procedures: the conventional formula of standard deviation, and the GARCH methodology. We find that uncertainty exerts a significantly negative effect on investment, i.e. uncertainty slows down capital accumulation. We also find that this negative relationship is closely related to the degree of market power of the firm. |
| Submitted paper full-text in .pdf |