Credit Constraints and the Cyclicity of R&D Investment: Evidence from France

We use a French firm-level panel data set over the period 1993-2004 to analyze the relationship between credit constraints and firms' R&D behavior over the business cycle. Our main results can be summarized as follows: (i) the share of R&D investment over total investment is countercyclical without credit constraints, but it becomes more procyclical as firms face tighter credit constraints; (ii) the result is magnified for firms in sectors that depend more heavily upon external finance; (iii) in more credit constrained firms, R&D investment share plummets during recessions but does not increase proportionally during upturns; (iv) average R&D investment and productivity growth are more negatively correlated with sales volatility in more credit constrained firms.

Classification JEL : E22, E32, O16, O30, O32. 

Keywords : Business cycles, R&D, Credit constraints, Volatility.

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Credit Constraints and the Cyclicity of R&D Investment: Evidence from France
  • Publié le 01/02/2008
  • 40 page(s)
  • EN
  • PDF (713.63 Ko)
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Mis à jour le : 02/10/2017 11:10