EconStor >
Verein für Socialpolitik >
Ausschuss für Entwicklungsländer, Verein für Socialpolitik >
Proceedings of the German Development Economics Conference, 2005 (Kiel) >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/19821
  
Title:Modeling Firm Dynamics to Identify the Cost of Financing Constraints in Ghanaian Manufacturing PDF Logo
Authors:Schündeln, Matthias
Issue Date:2005
Series/Report no.:Proceedings of the German Development Economics Conference, Kiel 2005 / Verein für Socialpolitik, Research Committee Development Economics 29
Abstract:Economic development requires the growth of productive firms. However, financing constraints may limit firms? investment abilities. This paper estimates the cost of financing constraints to firms, for example in terms of idle investment opportunities, and their aggregate implications. To this end, I develop and estimate a dynamic model of firm-level investment. The model allows me to deal with the main identification problem faced by work that studies financing constraints, namely to identify the investment opportunities and the constraints of a firm separately. The model also allows for other potential explanations of the observed phenomenon, in particular adjustment costs and uncertainty. I solve the model using dynamic programming methods and estimate it via simulation methods, using firm level data from Ghana. Counterfactual analyses are then carried out to quantify the importance of financing constraints. These counterfactuals indicate that removing the constraints would imply economically significant increases in investment that are associated with higher levels of consumption.
Document Type:Conference Paper
Appears in Collections:Proceedings of the German Development Economics Conference, 2005 (Kiel)

Files in This Item:
File Description SizeFormat
Schuendeln.pdf330.26 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/19821

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.