Credit constraints and the cyclicality of R&D investment: Evidence from France

Philippe Aghion, Philippe Askenazy, Nicolas Berman (), Gilbert Cette () and Laurent Eymard

PSE Working Papers from PSE (Ecole normale supérieure)

Abstract: We use a French firm-level data set containing 13,000 firms 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 less countercyclical as firms face tighter credit constraints; (ii) this result is magnified for firms in sectors that depend more heavily upon external finance, or that are characterized by a low degree of asset tangibility; (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.

New Economics Papers: this item is included in nep-eec, nep-eff, nep-ino, nep-ipr, nep-knm, nep-mac and nep-mic
Date: 2008
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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:pse:psecon:2008-26

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