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International trade, non-trading firms and their impact on labour productivity

Stephen Millard (), Anamaria Nicolae () and Michael Nower ()
Additional contact information
Stephen Millard: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH
Anamaria Nicolae: Durham University Business School
Michael Nower: Durham University Business School

No 787, Bank of England working papers from Bank of England

Abstract: In this paper we examine the impact of non-trading firms on labour productivity and its persistence in response to macroeconomic shocks, through their entry and exit into the domestic market, in a model with monopolistic competition and heterogeneous firms. We quantify the effects of various macroeconomic shocks on labour productivity and we demonstrate that non-trading domestic firms’ entry and exit into the domestic market explains the persistence of labour productivity in response to transitory shocks. We also show that the model successfully replicates the sluggish recovery of labour productivity in the United Kingdom since the Great Recession.

Keywords: International trade; heterogeneous firms; productivity; endogenous persistence (search for similar items in EconPapers)
JEL-codes: E24 F17 J24 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ict, nep-int, nep-lma and nep-mac
Date: 2019-04-12
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0787

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