On the Investment Sensitivity of Debt under Uncertainty

Christopher Baum (), Mustafa Caglayan () and Oleksandr Talavera

No 686, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: We investigate the impact of debt on a panel of U.S. manufacturing firms' capital investment behavior as the underlying firm-specific and macroeconomic uncertainty changes. Our estimates show that the influence of leverage on capital investment may be stimulating or mitigating depending on the effects of uncertainty.

Keywords: capital investment; leverage; uncertainty (search for similar items in EconPapers)
JEL-codes: E22 G31 D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-mac
Date: 2008-06-21
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Forthcoming, Economics Letters

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Persistent link: http://EconPapers.repec.org/RePEc:boc:bocoec:686

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