Credit Constraints and the Cyclicality of R&D Investment: Evidence from Micro Panel data

Philippe Aghion, Philippe Askenazy, Nicolas Berman (), Gilbert Cette and Laurent Eymard
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Nicolas Berman: Graduate Institute of International and Development Studies - IHEID - Graduate Institute of International and Development studies
Laurent Eymard: Banque de France - Banque de France

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Abstract: We use a French firm-level data set containing 13,000 firms over the period 1994-2004 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) R&D investment is countercyclical without credit constraints, but it becomes procyclical as firms face tighter credit constraints; (ii) this result is only observed 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 plummets during recessions but does not increase proportionally during upturns.

Keywords: business cycles; R&D; credit constraints; volatility (search for similar items in EconPapers)
Date: 2012-10
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Citations: View citations in EconPapers (68)

Published in Journal of the European Economic Association, 2012, 10 (5), pp.1001-1024. ⟨10.1111/j.1542-4774.2012.01093.x⟩

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Working Paper: Credit Constraints and the Cyclicality of R&D Investment: Evidence from Micro Panel data (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00754573

DOI: 10.1111/j.1542-4774.2012.01093.x

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