EconPapers    
Economics at your fingertips  
 

Barriers to firm growth in open economies

Facundo Piguillem () and Rubini Loris ()
Additional contact information
Rubini Loris: University of New Hampshire, Paul College of Business and Economics, 10 Garrison Ave,Durham, NH 03824, USA

The B.E. Journal of Macroeconomics, 2019, vol. 19, issue 1, 36

Abstract: Studies measuring barriers to firm growth assume economies are closed, ignoring information on firm exports. We argue that this information is key to interpreting data and improving the accuracy of model predictions. To do this, we develop a dynamic model with export and domestic barriers. We show theoretically that the closed economy model underestimates barriers and amplifies counterfactuals. By calibrating the model to a set of European countries, we find that the quantitative difference is significant: for example, the closed economy model fails to see that Italian firms are very efficient exporters but poor innovators, and instead concludes that they are mediocre innovators. In terms of predictions, the closed economy model delivers an elasticity of welfare to innovation costs between 31 and 64 percent larger than the open economy model.

Keywords: firm dynamics; innovation and trade; pareto size distribution of firms (search for similar items in EconPapers)
JEL-codes: F1 L11 O3 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://www.degruyter.com/view/j/bejm.2019.19.issu ... -0003.xml?format=INT (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Working Paper: Barriers to Firm Growth in Open Economies (2013) Downloads
Working Paper: Barriers to Firm Growth in Open Economies (2013) Downloads
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:bpj:bejmac:v:19:y:2019:i:1:p:36:n:11

Ordering information: This journal article can be ordered from
https://www.degruyter.com/view/j/bejm

Access Statistics for this article

The B.E. Journal of Macroeconomics is currently edited by Arpad Abraham and Tiago Cavalcanti

More articles in The B.E. Journal of Macroeconomics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().

 
Page updated 2020-12-24
Handle: RePEc:bpj:bejmac:v:19:y:2019:i:1:p:36:n:11