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<p>This paper investigates the link between corporate investments, eco-nomic policy uncertainty and the quality of institutional environments. The corporate investments of private firms in 10 European countries from 2009 to 2018 were examined and a negative effect of economic policy uncertainty on corporate investments was identified. More importantly, it was determined that the higher-quality institutional environments reduced the negative impact of economic policy uncertainty on corporate investments, especially when economic policy uncertainty was high. We also demonstrate the effects of government stability, legislative strength, government cohesion and socioeconomic conditions that mitigate the negative effects of economic policy uncertainty on corporate investments.</p>
</abstract>

This paper investigates the link between corporate investments, eco-nomic policy uncertainty and the quality of institutional environments. The corporate investments of private firms in 10 European countries from 2009 to 2018 were examined and a negative effect of economic policy uncertainty on corporate investments was identified. More importantly, it was determined that the higher-quality institutional environments reduced the negative impact of economic policy uncertainty on corporate investments, especially when economic policy uncertainty was high. We also demonstrate the effects of government stability, legislative strength, government cohesion and socioeconomic conditions that mitigate the negative effects of economic policy uncertainty on corporate investments.

Moderating effect of institutional environment on economic policy uncertainty: evidence from firms’ investments

Review of Economic Perspectives

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

This paper investigates the link between corporate investments, eco-nomic policy uncertainty and the quality of institutional environments. The corporate...

Moderating effect of institutional environment on economic policy uncertainty: evidence from firms’ investments

Published Online: Jun 20, 2023

Page range: 159 - 180

Received: May 12, 2023

Accepted: May 26, 2023

DOI: https://doi.org/10.2478/revecp-2023-0005

Keywords
economic policy uncertainty, firm investments, institutional environment, panel data

© 2023 Klára Večeřová, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Moderating effect of institutional environment on economic policy uncertainty: evidence from firms’ investments

Published Online: Jun 20, 2023

Page range: 159 - 180

Received: May 12, 2023

Accepted: May 26, 2023

DOI: https://doi.org/10.2478/revecp-2023-0005

Keywordseconomic policy uncertainty, firm investments, institutional environment, panel data

© 2023 Klára Večeřová, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
economic policy uncertainty, firm investments, institutional environment, panel data