Extent and intensity of investment with multiple capital goods

Δράκος, Κωνσταντίνος

doi:10.1080/00036846.2011.566205

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2018

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“…Therefore, uncertainty has a negative impact on business investment by discouraging or postponing investment. Subsequent studies extend the investment-uncertainty model to allow for multiple (heterogeneous) capital investment (Eberly and van Mieghem;1997;Bloom et al, 2007;and Drakos, 2012). In the presence of multiple capital goods, a firm's gross investment could be decomposed into the number of capital goods a firm invests in (the extensive margins), and the investment per type of capital goods (the intensive margins).…”

Section: Related Literature and Contribution To The Literaturementioning

confidence: 99%

Economic Policy Uncertainty in Turkey

Jirasavetakul¹,

Spilimbergo²

2018

IMF Working Papers

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Uncertainty over economic policy plays a key role in economic outcomes. But evidence and quantification for emerging markets are elusive because of measurement and reverse causality issues. In this paper, we construct a news-based economic policy uncertainty (EPU) index for Turkey and assess how it affects Turkish firms. To disentangle the issues of endogeneity and reverse causality, we use a difference-indifferences approach, exploiting the fact that firms with a high share of irreversible investment are more exposed to policy uncertainty. In sectors with large irreversible investment EPU has a greater effect on growth, investment, and leverage. The results are robust to different definitions of investment irreversibility, lag structure, and selection of sectors.

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Section: Related Literature and Contribution To The Literaturementioning

confidence: 99%