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Firm Level Investment in France and the United States: An Exploration of What We Have Learned in Twenty Years

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Author Info
Bronwyn H. Hall (Nuffield College, Oxford & University of California at Berkeley & IFS & NBER)
Jacques Mairesse (INSEE-CREST & EHESS & NBER)
Benoit Mulkay (CEREGMIA & Universite des Antilles et de la Guyane)
Jacques Mairesse (INSEE-CREST & EHESS & NBER)

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Abstract

We review the changes in modelling strategy and econometric methodology when estimating a firm-level investment equation on panel data during the past twenty years, in order to assess which of these changes result from new estimation methods and changes in the practice of panel data econometrics, and which are "real" and due to the evolution of the economy. Thus our paper consists of a series of comparisons: a simple accelerator-profit specification versus one with error correction, traditional between- and within-firm estimation versus GMM estimation, the investment behavior of French firms versus that of U.S. firms, and investment behavior today versus ten to twenty years ago. Although the econometric advances have perhaps not been as successful as we had hoped, we do find some real change in firm behavior and some improvement in equation specification and interpretation during the past twenty years.

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Paper provided by EconWPA in its series Econometrics with number 9902001.

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Length: 47 pages
Date of creation: 12 Feb 1999
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Handle: RePEc:wpa:wuwpem:9902001

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Related research
Keywords: investment; panel data; GMM; international comparisons; firm- level;

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Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity

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