“…Nakamura (2002) shows that, under the assumption of a decreasing-returns-to-scale technology, uncertainty reduces investment activity if the lifetime of capital is shorter than the firm's planning horizon, even without irreversibility of investment. Saltari and Ticchi (2007) and Femminis (2012) outline that the presence of risk-aversion, although not sufficient by itself, can explain a negative effect of uncertainty on investment activity. Arellano, Bai, and Kehoe (2012), Christiano, Motto, and Rostagno (2014), Gilchrist, Sim, and Zakrajšek (2014), and Dorofeenko, Lee, Salyer, and Strobel (2016) emphasize the role of financial distortions through which uncertainty negatively affects investment.…”