PERSISTENCE OF PROFITS IN THE LONG-RUN - A CRITICAL EXTENSION OF SOME RECENT FINDINGS

Recent discussions of the Persistence-of-Profits-Question have focussed on two econometric firm models which have been validated for several countries. The paper gives a brief summary of the model concepts and of the most important findings for the countries in question. Both models are then applied to a data bank of German enterprises, providing new results for one of them, which has not been realized in Germany yet. Finally, the estimation results of the two models are examined by variance analysis. This reveals that the convergence process is stronger than it has ever been perceived. © 1990.