Degree Name

Doctor of Philosophy


School of Accounting, Economics and Finance


The relationship between uncertainty and investment in the Australian mining industry remains unclear, especially after the global financial crisis. Similarly, research on the extent to which Australian private investment is affected by uncertainty and other macroeconomic, microeconomic and industry wide factors are sparse.

The goal of this thesis is to examine the impact of uncertainty, user cost of capital, demand shocks, and firm features on Australian private investment at different levels. To achieve this goal, this thesis applies empirical models such as the Generalised Autoregressive Conditional Heterogeneity (GARCH) model, the Ordinary Least Squares (OLS) method, and the Generalised Method of Moments (GMM). This study also examines how Australian investment responds over time to macroeconomic, industry-level and firm-level uncertainty.

Using the method of Bloom et al. (2007), this study reaches some novel conclusions on Australian private investment behaviour. At the macroeconomic level, the significantly positive effect of demand uncertainty on macroeconomic investment is only observed in the long term, while the negative effect of uncertainty in terms of trade is significant and persistent in both the short and long terms. In addition, the relationship between Chinese GDP growth uncertainty and macroeconomic investment, while expected to be negative, in fact is positive in the long-run estimation. By contrast, the relationship between nonlinear demand shocks and macro investment is negative. The long-term and positive effects of changes in company income tax and terms of trade are also captured. At the industry level, the test shows that uncertainty in demand, uncertainty in exchange rate expenses, and uncertainty in Chinese GDP growth have no significant effects on investment. Across all different industries, the significant effects on investment at the macroeconomic level are reduced. At the firm level, demand uncertainty is not the only factor to have a negative impact on investment in the mining industry. Moreover, when considered along with the features of mining firms, the effect of demand uncertainty on the short-run investment response to demand shocks is positive. The effect of changes in exchange rate costs is also positive, while the effect of firm size and the long-run effect of demand uncertainty is negative. In addition, firm investment is driven by small firms with large market capitalisation and Chinese ownership. Some results are consistent with the highlights in the reviewed literature. Interpretation of these results helps in understanding Australian private-investment behaviour in the mining industry, and the industrial sector in general.