The DOI matches its Crossref record; 15 of the 15 references it cites were found in a registry or an index.
Economic Instability and Aggregate Investment
Open accessAbstract
Recent literature suggests that because investment expenditures are irreversible and can be delayed, they may be highly sensitive to uncertainty. We briefly summarize the theory, stressing its empirical implications. We then use cross-sectional and time-series data for a set of developing and industrialized countries to explore the relevance of the theory for aggregate investment. We find that the volatility of the marginal profitability of capital-a summary measure of uncertainty-affects investment as the theory suggests, but the size of the effect is moderate and is greatest for developing countries. We also find that this volatility has little correlation with indicia of political instability used in recent studies of growth, as well as several indicia of economic instability. Only inflation is highly correlated with this volatility and is also a robust explanator of investment.
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Cites
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Irreversibility, Uncertainty, and Cyclical Investment
Bernanke, B. S. (1983) · The Quarterly Journal of Economics · doi:10.2307/1885568 · Cited by 4,112
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Irreversible Investment, Capacity Choice, and the Value of the Firm
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Self-citationThe Present Value of Profits and Cyclical Movements in Investment
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Mexico, the remaking of an economy
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Uncertainty, Investment, and Industry Evolution
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Self-citationPRIVATE INVESTMENT AND MACROECONOMIC ADJUSTMENT:A Survey
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Demir, F. (2009) · Journal of Development Economics · doi:10.1016/j.jdeveco.2008.04.002 · Cited by 622
Corporate Climate Risk: Measurements and Responses
Li, Q., Shan, H., Tang, Y., & Yao, V. (2024) · The Review of Financial Studies · doi:10.1093/rfs/hhad094 · Cited by 560
Policy uncertainty, irreversibility, and cross-border flows of capital
Julio, B., & Yook, Y. (2016) · Journal of International Economics · doi:10.1016/j.jinteco.2016.08.004 · Cited by 473
Volatility and Investment: Interpreting Evidence from Developing Countries
Aizenman, J., & Marion, N. (1999) · Economica · doi:10.1111/1468-0335.00163 · Cited by 349
Policy uncertainty, investment, and the cost of capital
Drobetz, W., El Ghoul, S., Guedhami, O., & Janzen, M. (2018) · Journal of Financial Stability · doi:10.1016/j.jfs.2018.08.005 · Cited by 341
Metadata
- Authors
- Pindyck, R. S., & Solimano, A.
- Venue
- NBER Macroeconomics Annual
- Publisher
- University of Chicago Press
- Published
- 1993-01
- Volume
- 8
- Pages
- 259-303
- ISSN
- 0889-3365 (ISSN-L)
- 1537-2642
- OpenAlex
- W3122022008
- Cited by
- 384
- References
- 15
- FWCI
- 12.93
- Type
- journal article
- Language
- en
- Open access
- bronze
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
