Entry and Exit, Unemployment, and the Business Cycle
Joshua Bernstein (),
Alexander Richter and
Nathaniel Throckmorton
No 2018, Working Papers from Federal Reserve Bank of Dallas
Abstract:
Establishment entry and exit is strongly correlated with output and unemployment. This paper examines how these linkages affect business cycle dynamics through the lens of a search and matching model augmented to include multi-worker establishments that endogenously enter and exit. Analytical results show cyclical entry and exit cause reallocation of inputs that amplifies and skews business cycle dynamics. When the model is calibrated to the data, it generates realistic asymmetry in output and unemployment, data-consistent counter-cyclical endogenous uncertainty and a 55% higher welfare cost than the model without entry and exit.
Keywords: Unemployment; Firm Dynamics; Nonlinear; Skewness; Tail Risk; Uncertainty (search for similar items in EconPapers)
JEL-codes: E24 E32 E37 J63 L11 (search for similar items in EconPapers)
Pages: 41
Date: 2020-06-24, Revised 2021-01-12
New Economics Papers: this item is included in nep-bec, nep-dge, nep-lab, nep-mac and nep-ore
Note: Previous version of this paper circulated under the title "Entry and Exit, Unemployment, and Macroeconomic Tail Risk."
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://www.dallasfed.org/-/media/documents/research/papers/2020/wp2018r1.pdf Full text (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:fip:feddwp:88256
Ordering information: This working paper can be ordered from
DOI: 10.24149/wp2018r1
Access Statistics for this paper
More papers in Working Papers from Federal Reserve Bank of Dallas Contact information at EDIRC.
Bibliographic data for series maintained by Amy Chapman ().