What Happens After an Investment Spike—Investment Events and Firm Performance

Bibliographic Data

ID19418233
AuthorsMichał Gradzewicz (0000-0002-4303-4505, National Bank of Poland, corresponding author)
Year2021
Volume39
Issue3
Pages636-651
Publication date2021-07-03
Open AccessNo
TypeARTICLE
VenueJournal of Business and Economic Statistics (JOURNAL)
Journal identifiersISSN: 0735-0015 • E-ISSN: 1537-2707
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/07350015.2019.1708369
OpenAlexW2895020704
LanguageEN
Citations received1
References cited29

Our study aims at investigating the relationship between investment spikes and subsequent productivity development at the firm level. We propose a novel identification scheme for the effects of an investment spike, using matching techniques and a tailored econometric modeling. It allows us to find efficiency differentials against matched firms in periods adjacent to the spike. We showed that TFP persistently falls after an investment spike, which is consistent with learning-by-doing models of firm decisions. As a result of capital deepening labor productivity actually rises after a spike. The capital deepening of larger firms is smaller and although the responses of TFP across size classes are similar, the labor productivity rise of smaller firms is more pronounced. Moreover, the positive correlation of responses of labor and K/L in periods after a spike shows that investments spikes induce complementarity between production factors

Econometrics · Economics · Labour economics · Macroeconomics · Microeconomics · Monetary economics · Productivity · Statistics · Total factor productivity · Capital Investment and Risk Analysis · Economic Growth and Productivity · Firm Innovation and Growth

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