Dejuan Bitria, DanielGhirelli, Corinna2025-03-182025-03-182021Dejuan-Bitria D, Ghirelli C. Economic policy uncertainty and investment in Spain. SERIEs. 2021;12(3):351-88. DOI: 10.1007/s13209-021-00237-51869-4187http://hdl.handle.net/10230/69956The aim of this paper is to investigate the effect of economic policy uncertainty on firms’ investment decisions. We focus on Spain for the period 1998–2014. To measure policy-related uncertainty, we borrow the economic policy uncertainty (EPU) indicator available for this country. We find strong evidence that uncertainty reduces corporate investment. This relationship appears to be nonlinear, being the marginal effect of uncertainty attenuated toward zero during periods of high uncertainty levels. Furthermore, the heterogeneous results suggest that the adverse effect of uncertainty is particularly relevant for highly vulnerable firms. Overall, these results are consistent with the hypotheses that economic policy-related uncertainty reduces corporate investment through increases in precautionary savings or to worsening of credit conditions.application/pdfeng© The Author(s) 2021. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.info:eu-repo/semantics/articlehttp://dx.doi.org/10.1007/s13209-021-00237-5Corporate investmentEconomic policy uncertaintyEPUFinancial frictionsinfo:eu-repo/semantics/openAccess