Abstract
We test the sunk costs explanation for hysteresis in exports using a sample of Spanish manufacturing firms for the period 1990–2000, allowing for sunk costs to be different for small and large firms. The data are drawn from the Spanish Encuesta sobre Estrategias Empresariales. To obtain consistent estimates for sunk costs, we control for all other sources of persistence and use a dynamic multivariate probit model that is estimated through pseudo simulated maximum likelihood techniques. Our results support the sunk costs explanation for hysteresis for both size groups and indicate that sunk costs are smaller for large firms.
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JEL no.
F12, L1, C23, C25
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Máñez, J., Rochina-Barrachina, M. & Sanchis, J. Sunk Costs Hysteresis in Spanish Manufacturing Exports. Rev World Econ 144, 272–294 (2008). https://doi.org/10.1007/s10290-008-0147-y
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DOI: https://doi.org/10.1007/s10290-008-0147-y