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Hiring, investments, and financial distress: evidence from a Panel VAR analysis of Japanese firms

Author

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  • Hirokazu Mizobata

    (Tezukayama University)

Abstract

We analyse the dynamic interactions among investment, hiring, and financial distress using a panel vector auto-regression approach to identify the effect of one shock while other shocks remain constant. The results indicate that adjustments in capital and labour significantly interact with each other and that financial distress critically influences these two components. We conclude that firm's dynamic optimization problem should be understood by accounting for these three factors simultaneously.

Suggested Citation

  • Hirokazu Mizobata, 2015. "Hiring, investments, and financial distress: evidence from a Panel VAR analysis of Japanese firms," Economics Bulletin, AccessEcon, vol. 35(4), pages 2558-2566.
  • Handle: RePEc:ebl:ecbull:eb-15-00532
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    References listed on IDEAS

    as
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    6. Eberly, Janice & Rebelo, Sergio & Vincent, Nicolas, 2012. "What explains the lagged-investment effect?," Journal of Monetary Economics, Elsevier, vol. 59(4), pages 370-380.
    7. Christiano, Lawrence J. & Trabandt, Mathias & Walentin, Karl, 2011. "Introducing financial frictions and unemployment into a small open economy model," Journal of Economic Dynamics and Control, Elsevier, vol. 35(12), pages 1999-2041.
    8. Lapatinas Athanasios, 2012. "On the Interrelation of Capital and Labor Adjustment Costs at the Firm Level," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 16(3), pages 1-36, September.
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    Cited by:

    1. Amundsen, Alexander, 2023. "Interaction effects in the adjustment cost function of firms," Journal of Economic Dynamics and Control, Elsevier, vol. 146(C).
    2. Motegi, Kaiji & Sadahiro, Akira, 2018. "Sluggish private investment in Japan’s Lost Decade: Mixed frequency vector autoregression approach," The North American Journal of Economics and Finance, Elsevier, vol. 43(C), pages 118-128.
    3. Tang, Le, 2022. "The dynamic demand for capital and labor: Evidence from Chinese industrial firms," Economic Modelling, Elsevier, vol. 107(C).

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    More about this item

    Keywords

    investment; labour demand; financial distress; panel VAR;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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