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2008•RePEc: Research Papers in EconomicsRequires access

On the Investment Sensitivity of Debt under Uncertainty

Christopher F. Baum, Mustafa Onur Caglayan, Oleksandr Talavera

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Abstract

We investigate the impact of debt on a panel of U.S. manufacturing firms' capital investment behavior as the underlying firm-specific and macroeconomic uncertainty changes. Our estimates show that the influence of leverage on capital investment may be stimulating or mitigating depending on the effects of uncertainty.

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What this paper is about

We investigate the impact of debt on a panel of U.S. manufacturing firms' capital investment behavior as the underlying firm-specific and macroeconomic uncertainty changes. Our estimates show that the influence of leverage on capital investment may be stimulating or mitigating depending on the effects of uncertainty.

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Available abstract

We investigate the impact of debt on a panel of U.S. manufacturing firms' capital investment behavior as the underlying firm-specific and macroeconomic uncertainty changes. Our estimates show that the influence of leverage on capital investment may be stimulating or mitigating depending on the effects of uncertainty.

Key concepts: Leverage (statistics), Debt, Economics, Investment (military), Monetary economics, Capital investment, Panel data, Capital (architecture)

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