True Versus Spurious State Dependence in Firm Performance: The Case of West German Exports


Kaiser, Ulrich ; Kongsted, Hans Christian


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URL: http://ub-madoc.bib.uni-mannheim.de/931
URN: urn:nbn:de:bsz:180-madoc-9319
Document Type: Working paper
Year of publication: 2004
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: D21 C23 ,
Subject headings (SWD): Deutschland <Westliche Länder> , Produktion , Export
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.
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Kaiser, Ulrich ; Kongsted, Hans Christian (2004) True Versus Spurious State Dependence in Firm Performance: The Case of West German Exports. Open Access [Working paper]
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