Allocation effects of uncertainty on resources in Japan

This paper provides evidence of a negative association between macroeconomic uncertainty and the cross sectional dispersion of investment rate for a panel of Japanese manufacturing firms. We show that an increase in uncertainty leads to the narrowing of the cross section dispersion of investment rate and vice versa. This finding suggests that firms’ fixed capital investment behavior becomes more homogeneous in times of increased uncertainty.

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Year of publication:	2014
Authors:	Caglayan, Mustafa ; Xu, Bing
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 122.2014, 1, p. 23-26
Publisher:	Elsevier
Subject:	Uncertainty \| Investment dispersion \| Panel data \| Japan

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Type of publication:	Article
Classification:	C21 - Cross-Sectional Models; Spatial Models ; D81 - Criteria for Decision-Making under Risk and Uncertainty ; E22 - Capital; Investment (including Inventories); Capacity
Source:	RePEc - Research Papers in Economics

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