Entry Costs and the Macroeconomy

Germán Gutiérrez, Callum Jones and Thomas Philippon

No 2019/233, IMF Working Papers from International Monetary Fund

Abstract: We combine a structural model with cross-sectional micro data to identify the causes and consequences of rising concentration in the US economy. Using asset prices and industry data, we estimate realized and anticipated shocks that drive entry and concentration. We validate our approach by showing that the model-implied entry shocks correlate with independently constructed measures of entry regulations and M&As. We conclude that entry costs have risen in the U.S. over the past 20 years and have depressed capital and consumption by about seven percent.

Keywords: WP; concentration ratio; fed funds rate; time series; Corporate Investment; Competition; Tobin’s Q; Zero Lower Bound; entry cost shock; monetary policy rule; cost shock; adjustment cost; firm entry; capital adjustment cost; nominal interest rate; exit rate; price choice; entry rate; Consumption; Corporate sector; Stocks; Europe (search for similar items in EconPapers)
Pages: 43
Date: 2019-11-01
New Economics Papers: this item is included in nep-com, nep-dge and nep-mac
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Citations: View citations in EconPapers (21)

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Working Paper: Entry Costs and the Macroeconomy (2019)
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