Economics Department

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TITLE:
Uncertainty Determinants of Firm Investment

AUTHOR(S):
Christopher F. Baum, Boston College
Mustafa Caglayan, University of Glasgow
Oleksandr Talavera, DIW Berlin

DOCUMENT TYPE: Article

ABSTRACT:
We investigate the impact of measures of uncertainty on firms' capital investment behavior using a panel of U.S. firms. Increases in firm-specific and CAPM-based measures have a significant negative impact on investment spending, while market-based uncertainty has a positive impact.