Resource title

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

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Resource description

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.

Resource author

Ulrich Kaiser, Hans Christian Kongsted

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Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/24089

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Adapt according to the presented license agreement and reference the original author.