Did the COVID-19 pandemic zombify the economy? A look at zombie firms

Alexander Amundsen, Amelie Lafrance and Danny Leung

Economic and Social Reports from Statistics Canada, Analytical Studies and Modelling Branch

Abstract: Zombie firms are businesses that persistently perform poorly over time without exiting, and their prevalence has been rising over time across many advanced economies. They negatively affect economic growth as they tend to be unproductive and compete with other healthy firms for scarce resources. In Canada, while the share of zombie firms was falling leading up to the COVID-19 pandemic, they were becoming less productive over time, were negatively affecting healthy firms and were increasingly lowering aggregate productivity. In 2019, aggregate productivity would have been up to 5% higher had zombie firms exited (Amundsen et al., 2023).

Keywords: zombie firms; COVID-19; business supports (search for similar items in EconPapers)
JEL-codes: J23 M21 (search for similar items in EconPapers)
Date: 2025-01-22
New Economics Papers: this item is included in nep-eff, nep-ent and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:stc:stcp8e:202500100002e

DOI: 10.25318/36280001202500100002-eng

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