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
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 / Materials (for Non-textual outputs)

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

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