Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/286538 
Year of Publication: 
2021
Citation: 
[Journal:] SERIEs - Journal of the Spanish Economic Association [ISSN:] 1869-4195 [Volume:] 12 [Issue:] 3 [Year:] 2021 [Pages:] 351-388
Publisher: 
Springer, Heidelberg
Abstract: 
The aim of this paper is to investigate the effect of economic policy uncertainty on firms' investment decisions. We focus on Spain for the period 1998-2014. To measure policy-related uncertainty, we borrow the economic policy uncertainty (EPU) indicator available for this country. We find strong evidence that uncertainty reduces corporate investment. This relationship appears to be nonlinear, being the marginal effect of uncertainty attenuated toward zero during periods of high uncertainty levels. Furthermore, the heterogeneous results suggest that the adverse effect of uncertainty is particularly relevant for highly vulnerable firms. Overall, these results are consistent with the hypotheses that economic policy-related uncertainty reduces corporate investment through increases in precautionary savings or to worsening of credit conditions.
Subjects: 
Corporate investment
Economic policy uncertainty
EPU
Financial frictions
JEL: 
D80
E22
G18
G31
G38
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size
747.15 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.