Research Discussion Papers, Bank of Finland
No 22/2002:
Dynamics of investment behaviour in Finland: aggregate and firm level evidence
Jouko Vilmunen ()
Abstract: In this paper we estimate reduced form investment
equations for Finland using aggregate as well as firm-level panel data. We
obtain significant estimates of the accelerator and user-cost effects on
investment with both aggregate and firm level data, but these effects
appear to be stronger at the aggregate level. Although the response of
firms’ investment spending to shifts in monetary policy seems to be
quantitatively nontrivial, it is surprisingly weak according to the results
with firm-level data, and a considerable amount of heterogeneity also
exists across firms in this respect. The firm-level estimates do not
provide evidence for the existence of binding financing constraints in
firms’ investment spending, at least among the sampled large firms, as we
cannot obtain a significant coefficient estimate on the cash flow
variable.
Keywords: accelerator; user cost; transmission of monetary policy; panel data; (follow links to similar papers)
JEL-Codes: C22; C33; E22; E52; (follow links to similar papers)
35 pages, September 17, 2002
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