El patrón inversor de los establecimientos industriales de la Comunidad de Madrid

In this paper we study the investment behavior of manufacturing firms using data from the Encuesta Económica al Sector Industrial compiled by the Statistical Office of Madrid's Regional Government. In the first part of the paper, we describe firms' investment behavior. We find that investment decisions are discontinuous, and tend to cluster in certain years. Null or low investment episodes are frequent, whereas high investment episodes are rare but quantitatively important. We also find evidence on replacement activity, as vintage capital models predict. First, the estimation of a hazard function indicates that the probability of finding a new investment spike is higher as time elapsed from the last spike passes. This result may be due to the obsolescence of capital as it ages. Second, we are interested in measuring the effect that high investment periods have on firm's productivity, in an attempt to find evidence of technical progress embodied on physical capital. We find some evidence of the positive effect of investment spikes on the firm's labor productivity.