LIMITED RE-ENTRY AND BUSINESS CYCLES

Patrick Macnamara

Journal of Economic Development, 2015, vol. 40, issue 4, 1-40

Abstract: This paper builds a model of firm dynamics to study the consequences of "Limited re-entry" for macroeconomic dynamics. In the literature, exit has typically been modeled as a permanent decision whereby it is not possible for an exiting plant or firm to "re-enter" in the future. This paper relaxes this assumption by assuming that the exit decision is not permanent, but that an exiting producer still has a "limited" ability to re-enter. The model, reasonably calibrated, indicates that limited re-entry has made business cycles more volatile and persistent, and has contributed to the slow recovery following the 2007-09 recession.

Keywords: Entry; Exit; Entrepreneurship; Firm Dynamics (search for similar items in EconPapers)
JEL-codes: E32 L11 L26 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Limited Re-Entry and Business Cycles (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:40:y:2015:i:4:p:1-40

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