Permanent and Temporary Inflation Uncertainty and Investment in the United States

Posted: 25 Oct 2014

See all articles by Joseph Byrne

Joseph Byrne

University of Strathclyde, Glasgow - Strathclyde Business School - Department of Economics

E. Philip Davis

National Institute of Economic and Social Research (NIESR); Brunel University

Date Written: November 1, 2004

Abstract

We estimate the impact on US non-residential fixed investment of permanent and temporary inflation uncertainty. We find that while both have a negative effect, temporary uncertainty is more important for investment. This study has implications for monetary policy and applied-econometric practice.

Keywords: Investment; Permanent and temporary uncertainty; Markov switching

JEL Classification: E22

Suggested Citation

Byrne, Joseph and Davis, E. Philip, Permanent and Temporary Inflation Uncertainty and Investment in the United States (November 1, 2004). Economics Letters, Vol. 85, No. 2, 2004, Available at SSRN: https://ssrn.com/abstract=2514242

Joseph Byrne (Contact Author)

University of Strathclyde, Glasgow - Strathclyde Business School - Department of Economics ( email )

100 Cathedral Street
Glasgow G4 0LN
United Kingdom
+44 (0)141 548 3869 (Phone)
+44 (0)141 548 4445 (Fax)

E. Philip Davis

National Institute of Economic and Social Research (NIESR)

2 Dean Trench Street
Smith Square
London, SW1P 3HE
United Kingdom

Brunel University ( email )

Kingston Lane
Uxbridge, Middlesex UB8 3PH
United Kingdom

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