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Credit Constraints and the Cyclicality of R&D Investment: Evidence from Micro Panel data

Author

Listed:
  • Philippe Aghion

    (Harvard University)

  • Philippe Askenazy

    (PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Banque de France - Banque de France)

  • Nicolas Berman

    (Graduate Institute of International and Development Studies - IHEID - Graduate Institute of International and Development studies)

  • Gilberte Cette

    (Banque de France - Banque de France, AMU - Aix Marseille Université)

  • Laurent Eymard

    (Banque de France - Banque de France)

Abstract

We use a French firm-level data set containing 13,000 firms over the period 1994-2004 to analyze the relationship between credit constraints and firms' R&D behavior over the business cycle. Our main results can be summarized as follows: (i) R&D investment is countercyclical without credit constraints, but it becomes procyclical as firms face tighter credit constraints; (ii) this result is only observed for firms in sectors that depend more heavily upon external finance, or that are characterized by a low degree of asset tangibility; (iii) in more credit-constrained firms, R&D investment plummets during recessions but does not increase proportionally during upturns.

Suggested Citation

  • Philippe Aghion & Philippe Askenazy & Nicolas Berman & Gilberte Cette & Laurent Eymard, 2012. "Credit Constraints and the Cyclicality of R&D Investment: Evidence from Micro Panel data," Post-Print halshs-00754573, HAL.
    • Handle: RePEc:hal:journl:halshs-00754573
    DOI: 10.1111/j.1542-4774.2012.01093.x
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    Keywords

    business cycles; R&D; credit constraints; volatility;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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