Empirical Economics

, Volume 45, Issue 1, pp 157–178

Linking investment spikes and productivity growth

Authors

    • Department of Economics, Palumbo-Donahue Schools of BusinessDuquesne University
  • Spiro E. Stefanou
    • Department of Agricultural Economics and Rural SociologyPennsylvania State University and Business Economics Group
    • Wageningen University

DOI: 10.1007/s00181-012-0599-8

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.

Keywords

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

JEL Classification

D24 L66 033

Acknowledgments

Support for this research from United States Department of Agriculture/National Research Initiative (award no. 03-35400-12949) is gratefully acknowledged.

Open Access

This article is distributed under the terms of the Creative Commons Attribution License which permits any use, distribution, and reproduction in any medium, provided the original author(s) and the source are credited.

Copyright information

© The Author(s) 2012