Investment, financial markets and uncertainty

Abstract

This contribution provides a theoretical explanation of the accumulation process, which focuses on the presence of correlations between physical and financial investment, and how the latter could affect the former. It also accounts for the influence of the cost of external finance and the impact of financial uncertainty as proxied by the interest rate and the exchange rate respectively; thereby utilising the Keynesian notion of conventions in the determination of investment. Our model is estimated by applying the difference GMM and the system GMM to a panel of 14 OECD countries from 1970 to 2010.Keywords: Accumulation; Financial markets; Conventions; Uncertainty; Keynesian economics. Resumo Investimento, mercados financeiros e incertezaEsta contribuição fornece uma explicação teórica do processo de acumulação, enfatizando a presença de correlações entre os investimentos produtivo e financeiro e, sobretudo, como este último pode afetar o primeiro. Também se considera a influência do custo do financiamento externo e do impacto da incerteza financeira, tomando como proxies, respectivamente, a taxa de juros e a taxa de câmbio. Ou seja, utiliza-se a noção keynesiana de convenções na determinação do investimento. O modelo é estimado a partir da aplicação de modelo GMM num painel de 14 países da OCDE de 1970 a 2010.

Does Shareholder Value Orientation or Financial Market Liberalization Slow Down Korean Real Investment?

“…Financial uncertainty has significant negative effects in the United States and the Netherlands. Arestis et al . (2012) introduce a Kaleckian investment function which accounts for the impact of financial uncertainty, as proxied by the exchange rate and stock price index.…”

“…Financial uncertainty has significant negative effects in the United States and the Netherlands. Arestis et al (2012) introduce a Kaleckian investment function which accounts for the impact of financial uncertainty, as proxied by the exchange rate and stock price index. The panel estimation which covers fourteen OECD countries from 1970 to 2010 demonstrates the negative influence of financial uncertainty on accumulation.…”

The Role of Central Bank of Jordan in Economic Development

“…Davidson (1991), claims that probability cannot be used as a fundamental instrument to forecast the expected values of economic variables. Arestis et al (2012), point out that financial bubbles originate from increasing speculation, which is a result of the lack of regulation on financial activities and assets. Rising uncertainly implies the failure to anticipate the future.…”

A decisão do investimento pós-keynesiana: teoria e aplicação

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