Investment and Demand Uncertainty

Luigi Guiso and Giuseppe Parigi

Working Papers from Banca Italia - Servizio di Studi

Abstract: Theoretical models of investment under uncertainty predict that the sign and the strength of the investment -uncertaintyrelationship is in principle ambiguous and can vary greatly across groups of firms depending on the degree of irreversibility of investment and the market power of the firm. This paper investigates the effects of uncertainty on the investment decisions of a sample of Italian manufacturing firms, using information on the subjective probability distribution of future demand for firms' products according to entrepreneurs.

Keywords: INVESTMENTS; RISK (search for similar items in EconPapers)
Pages: 62 pages
Date: 1996
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Citations: View citations in EconPapers (15)

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Related works:
Journal Article: Investment and Demand Uncertainty (1999)
Working Paper: Investment and Demand Uncertainty (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:banita:289

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