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To Buy or Not to Buy? Uncertainty, Irreversibility and Heterogeneous Investment Dynamics in Italian Company Data, Domenico Lombardi, Stephen Bond

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Abstract
This study tests for the presence of real options effects induced by uncertainty and (partial) irreversibility on fixed capital investment using Italian company data. The approach recognizes that firm-level investment spending may, itself, be aggregated over multiple investment decisions in separate types of capital goods and emphasizes effects of uncertainty on short-run investment dynamics. Using a survey-based measure of uncertainty related to the assessment of managers responsible for the firms' investment plans, the study finds evidence of heterogeneous and nonlinear dynamics pointing to a slower adjustment of investment in response to demand shocks at higher levels of uncertainty. The results also point to an additional source of nonlinearity originating from a convex response of investment to demand shocks
Table Of Contents
""Contents""; ""I. Introduction""; ""II. A Review of the Literature""; ""III. Econometric Specifications of Investment Behavior""; ""IV. Data Description""; ""V. Measuring Uncertainty""; ""VI. Econometric Analysis""; ""VII. Conclusion""; ""Appendix""; ""A . Survey of In vestment in Manufacturing (SIM)""; ""B . Company Accounts Data Service (CADS)""; ""C . Estimation of Capital Stocks""; ""D . Cash Flow""; ""E . Disposals""; ""F . In vestment""; ""G . Output""
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (29 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781462310586

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