INVENTORIES AND FIXED INVESTMENT

We model fixed investment incorporating the inventory decision of the firm. Using Dutch listed nonfinancial firms during 1985-2000, we find that the inventory stock is negatively associated with fixed investment. The results suggest that the inventory stock may be used by the firm as a buffer in response to unexpectedly high demand. In addition, the firm may hold the inventory stock as a contingency substitute for the financial source of fixed investment. Copyright Blackwell Publishing Ltd/University of Adelaide and Flinders University of South Australia 2004.

Legal Restrictions and Investment Growth

We analyze the impact of legal restrictions on investment growth at the firm level. With the help of a unique firm-level survey database, we analyze whether firm investments are related to the efficiency and quality of the judiciary. Furthermore, we analyze whether the investment behavior of large and small firms is influenced in the same manner and degree. Our results provide strong support for the hypothesis that investment growth may be hampered by laws that are experienced as negative by firms. We find that it especially is the smaller firms which are restricted by laws in their investment behavior. Larger (international) firms are better able to cope with the rules. These results are robust to different estimators. Copyright 2007 Blackwell Publishing Ltd..

The role of portfolio shocks in a structural vector autoregressive model of the Australian economy

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