Linking investment spikes and productivity growth

DOI

10.1007/s00181-012-0599-8

Document Type

Journal Article

Publication Date

8-1-2013

Publication Title

Empirical Economics

Volume

45

Issue

1

First Page

157

Last Page

178

ISSN

3777332

Keywords

Lumpy investments, Micro data, Productivity growth, U.S. Food industry

Abstract

We investigate the relationship between productivity growth and investment spikes using Census Bureau's plant-level dataset for the U.S. food manufacturing industry. There are differences in productivity growth and investment spike patterns across different sub-industries and food manufacturing industry in general. Our study finds empirical support for the learning-by-doing hypothesis by identifying some cases where the impact of investment spikes on TFP growth presents a U-shaped investment age-productivity growth pattern. However, efficiency and the learning period associated with investment spikes differ among plants across industries. The most pronounced impact of investment age on productivity growth (5.3 % for meat products, 4% for dairy products, and 2.8 % in all food manufacturing plants) occurs during the fifth year of post-investment spike. Thus, in general, the productivity gains tend to be fully realized with a 5-year technology learning period for this industry. © 2012 The Author(s).

Open Access

Hybrid_Gold

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