True Versus Spurious State Dependence in Firm Performance: The Case of West German Exports
AbstractThis paper analyzes the persistence of firms' exporting behavior in a panel of West German manufacturing firms. Dynamic binary choice models allow us to distinguish between true and spurious state dependence in firm performance. Using random effects models as well as a recent fixed effect approach which imposes few restrictions on unobservables, we find robust evidence of state dependence in the current export status of firms. Unobserved permanent firm heterogeneity ("spurious state dependence") is found to be less important than suggested by earlier studies. The existence of true state dependence in exports has direct economic policy implications: if policy successfully turns non-exporters into exporters, the effect is likely to be lasting. --
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Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 04-81.
Date of creation: 2004
Date of revision:
state dependence; export activity; dynamic binary choice models;
Other versions of this item:
- Ulrich Kaiser & Hans Christian Kongsted, 2004. "True versus spurious state dependence in firm performance: the case of West German exports," CAM Working Papers 2004-04, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
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