Investment Spikes in Dutch Horticulture: An Analysis at Firm and Aggregate Firm Level Over the Period 1975-1999

Natalia V. Goncharova and Arie J. Oskam

No 25621, 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia from International Association of Agricultural Economists

Abstract: An intermittent and lumpy pattern of investments is observed in the Dutch horticulture sector: only 16.5% of firms experience of investment spike, but they account for 67.7% of total investment. The objective of this paper is to examine the impact of time-varying and time-invariant variables on the probability of observing an investment spieke. This paper investigates the spells between investment spikes in a discrete-time proportional hazard framework. Duration models were estimated on two data sets: on an unbalanced panel and on a grouped into 10 groups data of Dutch glasshouse firms over the period 1975-1999. Different specifications of the model were estimated. Theoretically based model can sufficiently explain the occurrence of investment spikes. Both models show a 6- year period of investment spikes that is also confirmed for the average firm which exhibits a higher hazard ratio in the 6th, 12-13th and 19-20th years of duration. The presence of investment cycle can demonstrate the long-run policy of firms in presence of non-convex adjustment costs. The panel-data models are augmented with a Gamma distribution to account for unobserved heterogeneity among firms.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Pages: 15
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae06:25621

DOI: 10.22004/ag.econ.25621

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