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True Versus Spurious State Dependence in Firm Performance: The Case of West German Exports

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  • Kaiser, Ulrich
  • Kongsted, Hans Christian

Abstract

This 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 Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 04-81.

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Date of creation: 2004
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Handle: RePEc:zbw:zewdip:2886

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Keywords: state dependence; export activity; dynamic binary choice models;

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  1. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-64, September.
  2. Andrew B. Bernard & J. Bradford Jensen, 2001. "Why Some Firms Export," NBER Working Papers 8349, National Bureau of Economic Research, Inc.
  3. Almus, Matthias & Czarnitzki, Dirk, 2001. "The effects of public R&D subsidies on firms' innovation activities: the case of Eastern Germany," ZEW Discussion Papers 01-10, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Anna Cristina D'Addio & Bo E. Honoré, 2002. "Duration dependence and time varying variables in discrete time duration models," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 D6-3, International Conferences on Panel Data.
  5. Bo E. Honoré & Ekaterini Kyriazidou, 2000. "Panel Data Discrete Choice Models with Lagged Dependent Variables," Econometrica, Econometric Society, vol. 68(4), pages 839-874, July.
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Cited by:
  1. Bettina Peters, 2005. "Persistence of Innovation: Stylised Facts and Panel Data Evidence," Development and Comp Systems 0511021, EconWPA.
  2. Bussière, Matthieu, 2007. "Balance of payment crises in emerging markets: how early were the “early” warning signals?," Working Paper Series 0713, European Central Bank.
  3. Mangelsdorf, Stefan, 2010. "Die Transformation des Verarbeitenden Gewerbes in Berlin/Brandenburg unter Berücksichtigung der Exporte : eine empirische Analyse mit amtlichen Mikrodaten
    [The transition of the manufacturing indu
    ," MPRA Paper 39304, University Library of Munich, Germany.
  4. Fryges, Helmut, 2006. "Hidden champions - how young and small technology-oriented firms can attain high export-sales ratios," ZEW Discussion Papers 06-45, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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