Uncertainty and investment dynamics

Review of Economic Studies

Volumn 74, Issue 2, 2007, Pages 391-415

  Bloom, Nick ^a   Bond, Stephen ^b   Van Reenen, John ^c  

^a STANFORD UNIVERSITY   (United States)

^b UNIVERSITY OF OXFORD   (United Kingdom)

^c LONDON SCHOOL OF ECONOMICS   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

ADJUSTMENT MECHANISM; FIRM SIZE; INVESTMENT; MANUFACTURING; NUMERICAL MODEL; UNCERTAINTY ANALYSIS;

EID: 33947709325     PISSN: 00346527     EISSN: 1467937X     Source Type: Journal    
DOI: 10.1111/j.1467-937X.2007.00426.x     Document Type: Article

References (46)

1. ABEL, A. (1983), "Optimal Investment under Uncertainty", American Economic Review, 73, 228-233.
2. ABEL, A. and EBERLY, J. (1994), "A Unified Model of Investment under Uncertainty", American Economic Review, 84, 1369-1384.
3. ABEL, A. and EBERLY, J. (1996), "Optimal Investment with Costly Reversibility", Review of Economic Studies, 63, 581-593.
4. ABEL, A. and EBERLY, J. (1999), "The Effects of Irreversibility and Uncertainty on Capital Accumulation", Journal of Monetary Economics, 44, 339-377.
5. ABEL, A. and EBERLY, J. (2001), "Investment and q with Fixed Costs: An Empirical Analysis" (Mimeo, Wharton School, University of Pennsylvania).
6. ARELLANO, M. and BOND, S. (1991), "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations", Review of Economic Studies, 58, 277-297.
7. ARELLANO, M. and BOVER, O. (1995), "Another Look at the Instrumental-Variable Estimation of Error Components Models", Journal of Econometrics, 68, 29-52.
8. BERTOLA, G. and CABALLERO, R. (1994), "Irreversibility and Aggregate Investment", Review of Economic Studies, 61, 223-246.
9. BLOOM, N. (2000), "The Dynamic Effects of Real Options and Irreversibility on Investment and Labour Demand" (Working Paper No. W00/15, Institute for Fiscal Studies).
10. BLOOM, N. (2006), "The Impact of Uncertainty Shocks: A Firm-Level Estimation and a 9/11 Simulation" (Mimeo, Stanford).
11. BLOOM, N. (2007), "Uncertainty and the Dynamics of R&D", American Economic Review (forthcoming).
12. BLOOM, N., BOND, S. and VAN REENEN, J. (2003), "Uncertainty and Company Investment Dynamics: Empirical Evidence for UK Firms" (Discussion Paper No. 4025, CEPR).
13. BLOOM, N. and VAN REENEN, J. (2002), "Patents, Real Options and Firm Performance", Economic Journal, 112, C97-C116.
14. BLUNDELL, R. and BOND, S. (1998), "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models", Journal of Econometrics, 87, 115-143.
15. BOND, S., HARHOFF, D. and VAN REENEN, J. (2007), "Investment, R&D and Financial Constraints in Britain and Germany", Annales d'Economie et de Statistique (forthcoming).
16. BOND, S., KLEMM, A., NEWTON-SMITH, R., SYED, M. and VLIEGHE, G. (2004), "The Roles of Expected Profitability, Tobin's q and Cash Flow in Econometric Models of Company Investment" (Working Paper No. 222, Bank of England).
17. BOND, S., MOESSNER, R., MUMTAZ, H. and SYED, M. (2005), "Microeconometric Evidence on Uncertainty and Investment" (Mimeo, Institute for Fiscal Studies).
18. CABALLERO, R. (1991), "On the Sign of the Investment-Uncertainty Relationship", American Economic Review, 81, 279-288.
19. CABALLERO, R. and ENGEL, E. (1999), "Explaining Investment Dynamics in U.S. Manufacturing: A Generalized (S,s) Approach", Econometrica, 67, 783-826.
20. CABALLERO, R. and LEAHY, J. (1996), "Fixed Costs: The Demise of Marginal Q" (Working Paper No. 5508, NBER).
21. CAMPBELL, J., LETTAU, M., BURTON, G. M. and XU, Y. (2001), "Have Individual Stocks Become More Volatile? An Empirical Exploration of Idiosyncratic Risk", Journal of Finance, LVI (1), 1-43.
22. CHETTY, R. (2007), "Interest Rates, Irreversibility, and Backward-Bending Investment", Review of Economic Studies, 74, 67-91.
23. CLEVELAND, W. (1979), "Robust Locally Weighted Regression and Smoothing Scatterplots", Journal of the American Statistical Association, 74, 829-836.
24. COMIN, D. and PHILIPPON, T. (2006), "The Rise in Firm-Level Volatility: Causes and Consequences", NBER Macroeconomics Annual, 20, 167-227.
25. COOPER, R. and EJARQUE, J. (2003), "Financial Frictions and Investment: A Requiem in Q", Review of Economic Dynamics, 6, 710-728.
26. COOPER, R. and HALTIWANGER, J. (2006), "On the Nature of Capital Adjustment Costs", Review of Economic Studies, 73, 611-633.
27. DAVIS, S., HALTIWANGER, J., JARMIN, R. and MIRANDA, J. (2006), "Volatility and Dispersion in Business Growth Rates: Publicly Traded versus Privately Held Firms" (Working Paper No. w12354, NBER).
28. DIXIT, A. and PINDYCK, R. (1994) Investment Under Uncertainty (Princeton, NJ: Princeton University Press).
29. DOMS, M. and DUNNE, T. (1998), "Capital Adjustment Patterns in Manufacturing Plants", Review of Economic Dynamics, 67, 117-145.
30. DOYLE, J. and WHITED, T. (2001), "Fixed Costs of Adjustment, Coordination, and Industry Investment", Review of Economics and Statistics, 83, 628-637.
31. EBERLY, J. and VAN MIEGHEM, J. (1997), "Multi-Factor Dynamic Investment under Uncertainty", Journal of Economic Theory, 75, 345-387.
32. ENGLE, R. and GRANGER, C. (1987), "Cointegration and Error-Correction: Representation, Estimation and Testing", Econometrica, 55, 251-276.
33. ERICKSON, T. and WHITED, T. (2000), "Measurement Error and the Relationship between Investment and q", Journal of Political Economy, 108, 1027-1057.
34. FAZZARI, S., HUBBARD, R. and PETERSEN, B. (1988), "Financing Constraints and Corporate Investment", Brookings Papers on Economic Activity, 1, 141-195.
35. GUISO, L. and PARIGI, G. (1999), "Investment and Demand Uncertainty", Quarterly Journal of Economics, 114, 185-227.
36. HALL, B., MAIRESSE, J. and MULKAY, B. (1999), "Firm-Level Investment in France and the United States: An Exploration of What We Have Learned in Twenty Years", Annales d'Economie et de Statistique, 55-56, 27-69.
37. HARTMAN, R. (1972), "The Effect of Price and Cost Uncertainty on Investment", Journal of Economic Theory, 5, 258-266.
38. LEAHY, J. and WHITED, T. (1996), "The Effects of Uncertainty on Investment: Some Stylized Facts", Journal of Money Credit and Banking, 28, 64-83.
39. MERTON, R. (1980), "On Estimating the Expected Return on the Market", Journal of Financial Economics, 8, 323-361.
40. NILSON, O. and SCHIANTARELLI, F. (2003), "Zeroes and Lumps in Investment: Empirical Evidence on Irreversibilities and Nonconvexities", Review of Economics and Statistics, 85, 1021-1037.
41. REDUTO DOS REIS, I. (1999), "Irreversible Investment and Fixed Costs. Evidence from ARD Establishment Level Data" (Mimeo, University College London).
42. STOKEY, N. and LUCAS, R. with PRESCOTT, E. (1989) Recursive Methods in Economic Dynamics (Cambridge, MA: Harvard University Press).
43. THESMAR, D. and THOENIG, M. (2003), "Flexibility and Insecurity: How Outsourcing Amplifies Uncertainty" (Discussion Paper No. 3629, CEPR).
44. THOMAS, J. (2002), "Is Lumpy Investment Relevant for the Business Cycle?", Journal of Political Economy, 110, 508-534.
45. VERACIERTO, M. (2002), "Plant-Level Irreversible Investment and Equilibrium Business Cycles", American Economic Review, 92, 181-197.
46. WINDMEIJER, F. (1995), "A Note on R 2 in the Instrumental Variables Model", Journal of Quantitative Economics, 11, 257-261.