Is the investment-uncertainty relationship non-linear ? An empirical analysis for the Netherlands

  title={Is the investment-uncertainty relationship non-linear ? An empirical analysis for the Netherlands},
  author={Hong Bo},
We examine the investment-uncertainty relationship for a panel of Dutch nonfinancial firms. The system generalised method of moments (GMM) estimates suggest that the effect of uncertainty on investment is nonlinear: for low levels of uncertainty an increase in uncertainty has a positive effect on investment, while for high levels of uncertainty an increase in uncertainty lowers investment. This result is in line with a number of theoretical studies, but has never been documented empirically. 
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