Firm Entry and Exit and Aggregate Growth

Jose Asturias, Sewon Hur, Timothy Kehoe and Kim Ruhl

No 411, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: Applying the Foster, Haltiwanger and Krizan (FHK) (2001) decomposition to plant-level manufacturing data from Chile and Korea, we find that the entry and exit of plants account for a larger fraction of aggregate productivity growth during periods of fast GDP growth. To analyze this relationship, we develop a model of firm entry and exit based on Hopenhayn (1992). When we introduce reforms that reduce entry costs or reduce barriers to technology adoption into a calibrated model, we find that the entry and exit terms in the FHK decomposition become more important as GDP grows rapidly, just as they do in the data from Chile and Korea.

Keywords: Entry; Exit; Productivity; Entry costs; Barriers to technology adoption (search for similar items in EconPapers)
JEL-codes: E22 O10 O38 O47 (search for similar items in EconPapers)
Pages: 80
Date: 2021-10-19
New Economics Papers: this item is included in nep-bec, nep-cwa, nep-eff, nep-ent, nep-gro, nep-mac, nep-sbm and nep-tid
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https://www.dallasfed.org/~/media/documents/institute/wpapers/2021/0411.pdf Full text (application/pdf)

Related works:
Journal Article: Firm Entry and Exit and Aggregate Growth (2023)
Working Paper: Firm Entry and Exit and Aggregate Growth (2020)
Working Paper: Firm Entry and Exit and Aggregate Growth (2018)
Working Paper: Firm Entry and Exit and Aggregate Growth (2017)
Working Paper: Firm Entry and Exit and Aggregate Growth (2017)
Working Paper: Firm Entry and Exit and Aggregate Growth (2016)
Working Paper: Firm Entry and Exit and Aggregate Growth (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:93268

DOI: 10.24149/gwp411

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