Expansionary investment activities: Assessing equipment and buildings in productivity

Jasper Brinkerink, Andrea Chegut, Wilko Letterie*

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

We study firm-level expansionary investment activities in both equipment and buildings—the so-called investment spikes. Our identification strategy decomposes firm investment spikes into three streams: a spike in equipment only, buildings only, or a simultaneous spike. Empirically, we find that the timing and size of investment in equipment and buildings are not independent. Firms conducting a simultaneous spike enhance firm scale more than in the case of a spike in equipment or buildings alone. Employment growth occurs when a firm builds structures. Investment in equipment affects the optimal input mix and high productivity in equipment and buildings provides investment timing signals. In low-tech sectors firm production growth depends on investment in buildings. In contrast, a necessary condition for firms in high-tech sectors to grow their production is investment in equipment.

Original languageEnglish
Title of host publicationAdvances in Efficiency and Productivity Analysis
EditorsChristopher F. Parmeter, Robin C. Sickles
PublisherSpringer Science and Business Media B.V.
Pages303-333
Number of pages31
ISBN (Electronic)9783030471064
ISBN (Print)9783030471057
DOIs
Publication statusPublished - 20 Oct 2020
Event10th North American Productivity Workshop, NAPW 2018 - Miami, United States
Duration: 15 Jun 201818 Jun 2018

Publication series

NameSpringer Proceedings in Business and Economics
ISSN (Print)2198-7246
ISSN (Electronic)2198-7254

Conference

Conference10th North American Productivity Workshop, NAPW 2018
Country/TerritoryUnited States
CityMiami
Period15/06/1818/06/18

Keywords

  • buildings
  • efficiency
  • equipment
  • input mix
  • interrelation
  • investment spikes
  • labour intensity
  • low- and high-tech
  • productivity
  • scale

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