Financial Factors and Investment in Belgium, France, Germany and the UK: A Comparison Using Company Panel Data
We construct company panel datasets for manufacturing firms in Belgium, France, Germany and the UK, covering the period 1978-89. These datasets are used to estimate a range of empirical investment equations, and to investigate the role played by financial factors in each country. A robust finding is that cash flow or profits terms appear to be both statistically and quantitatively more significant in the UK than in the three continental European countries. This is consistent with the suggestion that financial constraints on investment may be relatively severe in the more market-oriented UK financial system.
We are grateful to Richard Blundell, Brownyn Hall, Hugo Kruiniger, Paul Milgrom, Alessandro Sembenelli, and to participants in conferences in Bergamo and Berlin for helpful comments. Financial support from the EC SPES programme, and from CREST, WZB and the ESRC Centre for the Microeconomic analysis of Fiscal Policy at IFS is gratefully acknowledged. Published as Bond, S., Elston, J.A., Mairesse, J., & Mulkay, B. (2003). Financial factors and investment in Belgium, France, Germany, and the United Kingdom: A comparison using company panel data. The Review of Economics and Statistics, 85(1), 153-165.
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