The study analyzes the investment behavior of Russian farms during the period of economic stabilization that followed the financial crisis of 1998. While the literature primarily uses accelerator and adjustment costs models to describe farms' investment behavior in the context of transition countries, our study reveals that error-correction formulation of the investment equation is more suited to analyzing Russian farms' investment patterns. In addition, by distinguishing between different categories of farms, we reveal significant differences in the investment patterns, not only across farms both with and without access to external finance, but also across mature and newly-established farms, owner- and employee-managed farms, and farms with high and low managerial competence, respectively.


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