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...

We survey recent microeconometric research on investment and employment that has used panel data on individual firms or plants. We focus on model specification and econometric estimation issues, but we also review some of the main empirical findings. We discuss advantages and limitations of...