Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/144240 
Year of Publication: 
2002
Series/Report no.: 
NBB Working Paper No. 26
Publisher: 
National Bank of Belgium, Brussels
Abstract: 
Using panel data for 2,329 Belgian firms observed between 1985 and 1999, this paper aims at getting a better understanding of Belgian firms' investment behavior. Two main and interrelated topics are investigated: the link between financial structure and investment decision, on the one hand, the effect of uncertainty on the level of investment, on the other hand. Such research sets forth the effect of some key variables, both in terms of level and volatility. The study is conducted within a structural approach but reduced form equations are also estimated. A generalised dynamic effect is investigated by introducing adjustment costs related through time. From that study, it clearly appears that small firms and high debt level firms are more sensitive to interest rate and cash flow. However, no role for investment price volatility is observed.
Subjects: 
Investment
debt constraint
panel data
GMM
JEL: 
C23
C33
E22
Document Type: 
Working Paper

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