No. 904 - Firm-level uncertainty and investments: evidence from South Tyrol
This study introduces a new measure of firm-level uncertainty based on firms' ability, or lack thereof, to predict own revenue dynamics. The heterogeneity of this measure is described both at the sectoral level and in relation to firm characteristics. The measure, constructed for a sample of firms in the Province of Bolzano for the period 2014-23, is used to analyze how the widespread climate of uncertainty observed among firms after the pandemic has influenced their investment decisions.
The share of "uncertain" firms - i.e. those who declare to be unable to predict the evolution of their revenues - is higher among small firms, as well as in the construction and manufacturing sectors, and has significantly increased between 2021 and 2023. An uncertain firm is 3.6 percentage points less likely than other firms to increase its investments in the following year. The size of this gap has remained unchanged over the last three years.
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20 December 2024
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