Urban Vibrancy and Corporate Growth
54 Pages Posted: 4 Aug 2014 Last revised: 2 Oct 2014
Date Written: July 2014
We find that a firm's investment is highly sensitive to the investments of other firms headquartered nearby, even those in very different industries. It also responds to fluctuations in the cash flows and stock prices (q) of local firms outside its sector. These patterns do not appear to reflect exogenous area shocks such as local shocks to labor or real estate values, but rather suggest that local agglomeration economies are important determinants of firm investment and growth.
Suggested Citation: Suggested Citation