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 inve stment carried out using the European Union investment survey sampling fram e for Ireland. The paper looks at decision-making by large manufacturing fi rms located in Ireland to see whether their investment decisions can be und erstood within the various models of risk that economists use. Equilibrium and disequilibrium models are examined to see what best explains the behavi our revealed by the firms' responses. The paper develops a categorisation o f the main theoretical channels of influence from risk to investment. In th e light of this theory, the survey replies of Irish firms are used to asses s the importance of the different channels of influence. (C) 2001 Elsevier Science B.V. All rights reserved.