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Effects of Economic Policy Uncertainty on Corporate Investment : Review of Literature and Evidence from Japan

Author

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  • Fujitani, Ryosuke
  • Hattori, Masazumi
  • Yasuda, Yukihiro

Abstract

This study reviews recent research on economic policy uncertainty（EPU）, which has received increasing attention. In particular, we focus on studies that utilize an index of EPU. Then, we empirically examine the effects of EPU on the investment behaviors of Japanese firms. We find that Japanese firms invest less when EPU increases. Our findings suggest that Japanese managers are more cautious when making investment decisions in response to a rise in EPU in Japan.

Suggested Citation

  • Fujitani, Ryosuke & Hattori, Masazumi & Yasuda, Yukihiro, 2022. "Effects of Economic Policy Uncertainty on Corporate Investment : Review of Literature and Evidence from Japan," Economic Review, Hitotsubashi University, vol. 73(4), pages 289-305, October.
    • Handle: RePEc:hit:ecorev:v:73:y:2022:i:4:p:289-305
    DOI: 10.15057/74340
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    More about this item

    JEL classification:

    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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