Global Uncertainty and Global Economic Policy Uncertainty: Different Implications for Firm Investment

Hyunduk Suh and Jin Young Yang
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Jin Young Yang: Zayed University

No 2020-1, Inha University IBER Working Paper Series from Inha University, Institute of Business and Economic Research

Abstract: Global Economic Policy Uncertainty (EPU) and non-EPU global uncertainty measures exhibit heterogenous behavior, especially in 2010s. Using firm-level data from 36 countries, we estimate the effect of global uncertainty on corporate investment in 1997-2016. Eleven global uncertainty measures, including global EPU, are employed to encompass macro, micro, and higher-order dimensions of uncertainty. We find different effect of EPU and non-EPU global uncertainty measures on investment. Only EPU measures negatively affect investment, while non-EPU measures have positive effects. The negative effects of EPU measures on investment are stronger for firms with high investment irreversibility and high leverage, but no such effect is observed from non-EPU measures.

Keywords: Global uncertainty; Economic Policy Uncertainty, Investment (search for similar items in EconPapers)
JEL-codes: E22 F30 G31 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2020-05
New Economics Papers: this item is included in nep-int and nep-mac
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Journal Article: Global uncertainty and Global Economic Policy Uncertainty: Different implications for firm investment (2021)
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