Investment, Expectations and Uncertainty: Empirical Evidence on the Relevance of Firm Size

Tinbergen Institute Discussion Paper No. 2003-025/3

20 Pages Posted: 4 Jun 2003

See all articles by Mark J. Koetse

Mark J. Koetse

Free University of Amsterdam - Department of Spatial Economics

Arno J. van der Vlist

University of Groningen - Department of Economic Geography

Henri L. F. de Groot

VU University Amsterdam - Department of Spatial Economics; Tinbergen Institute

Date Written: March 2003

Abstract

This paper analyses the effect of uncertainty on investment spending. We analyse two types of investment, i.e. aggregate investment and investment in energy saving technologies, using subjective evaluations of expectations and uncertainty of Dutch firms in 1997. We estimate several models distinguishing between small and large firms. The results suggest that investments in energy saving technologies in small firms are largely cost driven, whereas in large firms they are an integral part of general investment spending. Furthermore, expectations and uncertainty have important although different effects on investment spending in small and large firms. We find evidence, at least for small firms, that there are important differences between the effects of uncertainty around input and output variables.

Keywords: Investment, Expectations, Uncertainty, Firm size

JEL Classification: D81, L25, Q21

Suggested Citation

Koetse, Mark J. and van der Vlist, Arno J. and de Groot, Henri L.F., Investment, Expectations and Uncertainty: Empirical Evidence on the Relevance of Firm Size (March 2003). Tinbergen Institute Discussion Paper No. 2003-025/3. Available at SSRN: https://ssrn.com/abstract=391220 or http://dx.doi.org/10.2139/ssrn.391220

Mark J. Koetse (Contact Author)

Free University of Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands
+31(0)20 598 6168 (Phone)
+31(0)20 598 6004 (Fax)

Arno J. Van der Vlist

University of Groningen - Department of Economic Geography ( email )

P.O. Box 800, 9700 AV
Groningen
Netherlands

HOME PAGE: http://www.rug.nl/research/ursi/rec/

Henri L.F. De Groot

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands
+31 20 598 6168 (Phone)
+31 20 598 6004 (Fax)

Tinbergen Institute

Gustav Mahlerplein 17
Amsterdam, 1082 MS
Netherlands

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