A Non‐parametric Estimation of Productivity with Idiosyncratic and Aggregate Shocks: The Role of Research and Development (R&D) and Corporate Tax : The Role of Research and Development (R&D) and Corporate Tax

Bournakis, I. and Tsionas, M. (2024) A Non‐parametric Estimation of Productivity with Idiosyncratic and Aggregate Shocks: The Role of Research and Development (R&D) and Corporate Tax : The Role of Research and Development (R&D) and Corporate Tax. Oxford Bulletin of Economics and Statistics, 86 (3). pp. 641-671. ISSN 0305-9049

Full text not available from this repository.

Abstract

We develop a non-parametric technique framework for estimating firm-level Total Factor Productivity (TFP). Our paper has two major novelties: first, we propose a modelling of productivity with both firm-idiosyncratic factors and aggregate shocks. Second, we apply the Bayesian Markov Chain Monte Carlo (MCMC) technique that offers a numerical integration of productivity outside the posterior overcoming the restrictive assumptions about the relationship between productivity and variable production inputs. We implement our methodology in a group of 4,286 manufacturing firms from France, Germany, Italy, and the UK (2001–14). The results show that: (i) aggregate shocks matter for firm TFP evolution. The global financial crisis of 2008 caused severe, albeit short, adverse effects on TFP; (ii) there is substantial heterogeneity across countries in the way firms react to changes in R&D and taxation. German and UK firms are more sensitive to fiscal changes than R&D, while the opposite is true for Italian firms. R&D and taxation effects are symmetrical for French firms; (iii) the UK productivity handicap continues for years after the financial crisis; and (iv) there are substantial knowledge spillovers among German and Italian firms.

Item Type:
Journal Article
Journal or Publication Title:
Oxford Bulletin of Economics and Statistics
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000/2002
Subjects:
?? economics and econometricssocial sciences (miscellaneous)statistics and probabilitystatistics, probability and uncertainty ??
ID Code:
213189
Deposited By:
Deposited On:
19 Jan 2024 16:05
Refereed?:
Yes
Published?:
Published
Last Modified:
16 Jul 2024 00:45