Firm-Level Investment in France and the United States: An Exploration of What We Have Learned in Twenty Years

We review the changes in modelling strategy and econometric methodology when estimating a firm-level investment equation on panel data during the past twenty years, in order to assess which of these changes result from new estimation methods and changes in the practice of panel data econometrics, and which are "real" and due to the evolution of the economy. Thus our paper consists of a series of comparisons: a simple accelerator-profit specification versus one with error correction, traditinoal between- and within-firm estimation versus GMM estimation, the investment behavior of French firms versus that of US firms, and investment behavior today versus ten to twenty years ago.