European Business Schools Librarian's Group

Department of Economics Working Papers,
Vienna University of Economics and Business, Department of Economics

Financial uncertainty and business investment

Engelbert Stockhammer () and Lucas Grafl ()
Additional contact information
Engelbert Stockhammer: Department of Economics, Vienna University of Economics & B.A.
Lucas Grafl: Department of Economics, Vienna University of Economics & B.A.

Abstract: The paper seeks to contribute 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 USA, the UK, the Netherlands, Germany, and France. Financial uncertainty has significant negative effects in the USA and the Netherlands.

JEL-codes: E12; E20; E22; E25; E61 August 2008

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