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Growing through the merger and acquisition

Jianhuan Xu ()

Journal of Economic Dynamics and Control, 2017, vol. 80, issue C, 54-74

Abstract: The paper studies with an endogenous growth model how the merger and acquisition (M&A) affects the aggregate growth rate. We model the M&A as a capital reallocation process, which can increase both productivity and growth rates of firms. The model is tractable and greatly consistent with patterns observed in the M&A at the micro level. Matching our model to the data, we find that prohibiting the M&A would lead to the reduction of the aggregate growth rate of US economy by 0.1% and the reduction of the aggregate TFP by 5%.

Keywords: Growth; Merger and acquisition; Knowledge spillover; Matching; Complementarity; Capital reallocation (search for similar items in EconPapers)
JEL-codes: O49 G34 E10 (search for similar items in EconPapers)
Date: 2017
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Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok

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Handle: RePEc:eee:dyncon:v:80:y:2017:i:c:p:54-74