Financial Uncertainty and Business Investment |
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| Authors: | Engelbert Stockhammer Lucas Grafl |
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| Affiliation: | 1. Faculty of Arts and Social Sciences , Kingston University , Kingston upon Thames, UK;2. Department of Economics , Vienna University of Economics and Business , Vienna, Austria e.stockhammer@kingston.ac.uk;4. Department of Economics , Vienna University of Economics and Business , Vienna, Austria |
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| Abstract: | The paper contributes to the empirical analysis of financial uncertainty and investment from a Post Keynesian perspective. The paper uses the volatility of the exchange rate, the volatility of the stock market index, and the real gold price as indicators for financial uncertainty. An increase in the volatility of a variable is a sufficient, but not a necessary condition for an increase in uncertainty regarding this variable. The effects of changes in uncertainty on investment are investigated econometrically for the United States, the United Kingdom, the Netherlands, Germany and France. Financial uncertainty, we find, has significant negative effects in the US and the Netherlands. |
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