01971cas a2200253 a 4500 AALejournalIMF008579 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451948011 1018-5941 BD-DhAAL BD-DhAAL Lombardi, Domenico. To Buy or Not to Buy? : Uncertainty, Irreversibility and Heterogeneous Investment Dynamics in Italian Company Data / Domenico Lombardi, Stephen Bond. Washington, D.C. : International Monetary Fund, 2004. 1 online resource (29 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This study tests for the presence of real options effects induced by uncertainty and (partial) irreversibility on fixed capital investment using Italian company data. The approach recognizes that firm-level investment spending may, itself, be aggregated over multiple investment decisions in separate types of capital goods and emphasizes effects of uncertainty on short-run investment dynamics. Using a survey-based measure of uncertainty related to the assessment of managers responsible for the firms' investment plans, the study finds evidence of heterogeneous and nonlinear dynamics pointing to a slower adjustment of investment in response to demand shocks at higher levels of uncertainty. The results also point to an additional source of nonlinearity originating from a convex response of investment to demand shocks. Mode of access: Internet Bond, Stephen. IMF Working Papers; Working Paper ; No. 2004/104 Full text available on IMF http://elibrary.imf.org/view/journals/001/2004/104/001.2004.issue-104-en.xml IMF e-Library