True versus spurious state dependence in firm performance: the case of West German exports

Ulrich Kaiser () and Hans Christian Kongsted
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Hans Christian Kongsted: Institute of Economics, University of Copenhagen

No 2004-04, CAM Working Papers from University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics

Abstract: 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.

Keywords: state dependence; export activity; dynamic binary choice models (search for similar items in EconPapers)
JEL-codes: C23 D21 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2004-03
New Economics Papers: this item is included in nep-dcm
References: View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: True Versus Spurious State Dependence in Firm Performance: The Case of West German Exports (2004)
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