True versus spurious state dependence in firm performance: the case of West German exports
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.
|Date of creation:||Mar 2004|
|Date of revision:|
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- 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.
- Anna Christina D'Addio & Bo E. Honoré, . "Duration Dependence and Timevarying Variables in Discrete Time Duration Models," Economics Working Papers 2002-13, Department of Economics and Business Economics, Aarhus University.
- Almus, Matthias & Czarnitzki, Dirk, 2003.
"The Effects of Public R&D Subsidies on Firms' Innovation Activities: The Case of Eastern Germany,"
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- 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.
- 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.
- 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.
- Andrew B. Bernard & J. Bradford Jensen, 2004.
"Why Some Firms Export,"
The Review of Economics and Statistics,
MIT Press, vol. 86(2), pages 561-569, May.
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