Economics at your fingertips  

Endogenous Turnover and Macroeconomic Dynamics

Masashige Hamano () and Francesco Zanetti ()

Review of Economic Dynamics, 2017, vol. 26, 263-279

Abstract: This paper introduces endogenous product entry and exit based on creation and destruction of product variety in a general equilibrium model. Recessionary technology shocks induce exit of unprofitable products on impact, allocating resources towards more productive production lines. However, during the recovery phase, less productive production lines survive destruction, counteracting the original increase in productivity. The analysis shows that recoveries hinge on lower product destruction rather than higher product creation. We find that product heterogeneity and the persistence of technology shocks play a critical role for the cyclicality of product turnover. Endogenous product destruction is important to evaluate the effect of permanent policies of entry deregulation and subsidies aimed to stimulate the economy. (Copyright: Elsevier)

Keywords: Product heterogeneity; Endogenous product destruction; Business cycles (search for similar items in EconPapers)
JEL-codes: D24 E23 E32 L11 L60 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See for details.

Related works:
Software Item: Code and data files for "Endogenous Turnover and Macroeconomic Dynamics" (2017) Downloads
Working Paper: Endogenous Product Turnover and Macroeconomic Dynamic (2015) Downloads
Working Paper: Endogenous firm creation and destruction over the business cycle (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:

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/

Access Statistics for this article

Review of Economic Dynamics is currently edited by Loukas Karabarbounis

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().

Page updated 2020-10-25
Handle: RePEc:red:issued:15-258