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Firm Dynamics in News Driven Business Cycle: The Role of Endogenous Survival Rate

Zhiwei Xu and Haichao Fan

MPRA Paper from University Library of Munich, Germany

Abstract: Our structural VAR shows that the new business formation in U.S. data has similar positive co-movement pattern as common aggregate variables in response to a favorable anticipated shock about technology. However, incorporating �firm dynamics into Jaimovich and Rebelo's (Jaimovich and Rebelo, 2009, American Economic Review) model cannot explain our empirical fi�nding. Even worse, the model predicts an aggregate recession instead of a boom. Then, we show that this problem can be resolved with a minor modification by introducing endogenous survival rate of the new entrants.

Keywords: Firm Dynamics; Aggregate Co-movement; Expectation Driven Business Cycle; News Shocks (search for similar items in EconPapers)
JEL-codes: E22 E32 (search for similar items in EconPapers)
Date: 2010-11, Revised 2011-02
New Economics Papers: this item is included in nep-bec, nep-dge, nep-ent and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/30203/1/MPRA_paper_30203.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/46570/8/MPRA_paper_46570.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/50051/1/MPRA_paper_50051.pdf revised version (application/pdf)

Related works:
Journal Article: Firm dynamics in news-driven business cycles: the role of endogenous survival rate (2014) Downloads
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