This paper tests for the importance of cash flow on investment in fixed capital and R&D using firm-level panel data in two countries between 1985 and 1994. For German firms, cash flow is not informative in simple econometric models of fixed investment or R&D. In identical pecifications for...

European Union countries have implemented widespread reforms to product markets in order to stimulate competition, innovation and economic growth. We provide empirical evidence that the reforms carried out under the EU Single Market Programme (SMP) were associated with increased product market...

We analyze the impact of product market competition on unemployment and wages, and how this depends on labour market institutions. We use differential changes in regulations across OECD countries over the 1980s and 1990s to identify the effects of competition. We find that increased product...

We investigate the empirical usefulness of a new measure of the degree of competition in a market, proposed by Boone (2000). This measure is based on the reduction in profits that firms experience as a result of cost inefficiencies. We compare this with measurescommonly used by policy makers and...

The UK’s poor productivity performance relative to the US has been a focus for government policy and analysis in recent Budgets and Pre-Budget Reports. Figure 1, where the UK business sector is scaled to 100, shows that US business sector labour productivity (value-added per worker) was just...

The ability to create a competitive and thriving economy is partly dependent onknowledge production and innovation. So how well is the UK performing in theseimportant areas? To assess the UK’s comparative performance, and gauge how itmight perform in the future, it is a useful exercise to...