Credit Constraints and the Cyclicality of R&D Investment: Evidence from France

P. Aghion, P. Askenazy, Nicolas Berman (), Gilbert Cette () and L. Eymard

Documents de Travail from Banque de France

Abstract: We use a French firm-level panel data set over the period 1993-2004 to analyze the relationship between credit constraints and firms' R&D behavior over the business cycle. Our main results can be summarized as follows: (i) the share of R&D investment over total investment is countercyclical without credit constraints, but it becomes more procyclical as firms face tighter credit constraints; (ii) the result is magnified for firms in sectors that depend more heavily upon external finance; (iii) in more credit constrained firms, R&D investment share plummets during recessions but does not increase proportionally during upturns; (iv) average R&D investment and productivity growth are more negatively correlated with sales volatility in more credit constrained firms.

Keywords: Business cycles; R&D; Credit constraints; Volatility. (search for similar items in EconPapers)
JEL-codes: E22 E32 O16 O30 O32 (search for similar items in EconPapers)
Date: 2008

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Related works:
Working Paper: Credit constraints and the cyclicality of R&D investment: Evidence from France (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:bfr:banfra:198

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