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Growth Processes of Italian Manufacturing Firms

  • Alex Coad

    (Max Planck Institute of Economics, Jena, Germany)

  • Rekha Rao

    (Tanaka Business School, Imperial College London)

  • Federico Tamagni

    ()

    (LEM, Sant'Anna School of Advanced Studies, Pisa, Italy)

We apply a reduced-form vector autoregression model to analyze the growth processes of Italian manufacturing firms, 1989-1997. We focus in particular on lead-lag associations describing the coevolution of employment growth, sales growth, growth of profits and labour productivity growth. Employment growth precedes sales growth and growth of profits, and in turn sales growth is also associated with subsequent profits growth. There appears to be little feedback of either sales or profits on employment growth, however. There is no clear association of employment growth with subsequent changes in labour productivity, although at the second lag there is a small negative association. Productivity growth, however, is positively associated with subsequent growth of employment and sales. Quantile autoregressions find asymmetries between growth processes for growing and shrinking firms.

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Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2008-039.

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Date of creation: 06 May 2008
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Handle: RePEc:jrp:jrpwrp:2008-039
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