We use a dynamic framework and panel methodology to investigate the determinants of a time-varying corporate capital structure. Our sample comprises 706 European firms from France, Germany, Italy and the U.K. over the period from 1983 to 2002. If capital structure adjustment is costly, firms may...

Our paper deals with econometric developments for the estimation of the gravity model whichlead to convergent parameter estimates even when a correlation exists between theexplanatory variables and the specific unobservable characteristics of each unit. Weimplement panel data econometric...

Numerous empirical studies provide evidence on the value relevance of capitalizing expenditures on intangibles such as research & development (Lev and Sougiannis 1996, Hand 2003). However, accounting standards in many countries, such as the U.S. or Germany, prohibit capitalizing these. In this...

We estimate wage and job tenure functions that include individual and firm effects capturingtime-invariant unobserved worker and firm heterogeneity using German linked employeremployeedata (LIAB data set)...

Our paper introduces a new estimation method for arbitrary temporal heterogeneityin panel data models. The paper provides a semiparametric method for estimatinggeneral patterns of cross-sectional specific time trends. The methods proposed in thepaper are related to principal component analysis...

Following a positive shock, financing constraints will prolong or impede economic expansionthat would have been optimal in an unconstrained environment. The study ofdynamic adjustment therefore offers a direct way of verifying the presence of financingconstraints and assessing their consequences...

Understanding adjustment processes has become central in economics. Empirical analysisis fraught with the problem that the target is usually unobserved. This paper develops,simulates and applies GMM methods for estimating dynamic adjustment models ina panel data context with partially unobserved...

The establishment of European monetary union (EMU) was widely expected to causeprice convergence among member states. In an investigation of this claim, the presentstudy avoids problems of comparability and representativeness by using an extremelydetailed and comprehensive scanner database on...

A core stylized fact of the empirical exchange rate literature is that half-life deviationsof equilibrium real exchange rates from levels implied by Purchasing Power Parity(PPP) are very persistent. Empirical efforts to explain this persistence typicallyproceed along two distinct paths,...

We provide the first cross-country evidence of the effect of investment by privateequity firms on innovation, focusing on a sample of European countries and usingKortum and Lerner’s (2000) empirical methodology. Using an 18-country panelcovering the period 1991-2004, we study how private...