The effect of business risk on manufacturing investment - Sectoral survey evidence from Ireland

This paper analyses the results of a special sample survey on risk and investment carried out using the European Union investment survey sampling frame for Ireland. The paper looks at decision-making by large manufacturing firms located in Ireland to see whether their investment decisions can be understood within the various models of risk that economists use. Equilibrium and disequilibrium models are examined to see what best explains the behaviour revealed by the firms' responses. The paper develops a categorisation of the main theoretical channels of influence from risk to investment. In the light of this theory, the survey replies of Irish firms are used to assess the importance of the different channels of influence. (C) 2001 Elsevier Science B.V. All rights reserved.