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Firm Level Investment in France and the United States: An Exploration of What We Have Learned in Twenty Years

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  • Bronwyn H. Hall, Jacques Mairesse and Benoit Mulkay.

Abstract

We review the changes in modelling strategy and econometric methodology when estimating a firm-level investment equation on panel data during the past twenty years, in order to assess which of these changes result from new estimation methods and changes in the practice of panel data econometrics, and which are "real" and due to the evolution of the economy. Thus our paper consists of a series of comparisons: a simply accelerator-profit specification versus one with error correction, traditional between- and within-firm estimation versus GMM estimation, the investment behavior of French firms versus that of U.S. firms, and investment behavior today versus ten to twenty years ago. Although the econometric advances have perhaps not been as successful as we had hoped, we do find some real change in firm behavior and some improvement in equation specification and interpretation during the past twenty years.

Suggested Citation

  • Bronwyn H. Hall, Jacques Mairesse and Benoit Mulkay., 1998. "Firm Level Investment in France and the United States: An Exploration of What We Have Learned in Twenty Years," Economics Working Papers 98-261, University of California at Berkeley.
  • Handle: RePEc:ucb:calbwp:98-261
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    More about this item

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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