 Investment--uncertainty relationship: differences between intangible and physical capitalEconomics of Innovation and New Technology, 2016, vol. 25, issue 3, 240-268 Abstract: This paper disentangles the effects of uncertainty in explaining the heterogeneity of firms’ investments. In particular, following Bloom [2007. “Uncertainty and the Dynamics of R&D.” American Economic Review 97 (2): 250--255], we test the role of uncertainty and liquidity constraints extending the model to include R&D, non-R&D intangibles, as well as physical capital. The analysis is performed on a large data set of Italian firms, covering both manufacturing and services sectors, as well as large and small firms. We show that non-convex adjustment costs affect different capital inputs in different ways, depending on their degree of firm-specificity. The results confirm the Bloom model: flow adjustment costs explain investment in R&D and, to a lesser extent, in non-R&D intangibles. However, it struggles to explain tangible investment plans because of the ambiguous effect of the stock adjustment costs. Date: 2016 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:ecinnt:v:25:y:2016:i:3:p:240-268 Ordering information: This journal article can be ordered from DOI: 10.1080/10438599.2015.1076197 Access Statistics for this article Economics of Innovation and New Technology is currently edited by Professor Cristiano Antonelli More articles in Economics of Innovation and New Technology from Taylor & Francis Journals |
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