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Title:True Versus Spurious State Dependence in Firm Performance: The Case of West German Exports PDF Logo
Authors:Kaiser, Ulrich
Kongsted, Hans Christian
Issue Date:2004
Series/Report no.:ZEW Discussion Papers 04-81
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.
Subjects:state dependence
export activity
dynamic binary choice models
JEL:D21
C23
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des ZEW
ZEW Discussion Papers

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