Firm entry under financial frictions

Miguel Casares and Jean-Christophe Poutineau ()
Additional contact information
Jean-Christophe Poutineau: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

Post-Print from HAL

Abstract: How does a general-equilibrium model behave when incorporating competitive firm entry that requires external finance? After conducting a steady-state analysis, we reach three main results. First, the financial constraint has contractionary effects on both equity investment and the labor supply as they are inversely related to the marginal finance cost. Second, the dynamics of firm creation and destruction amplify the impact of changes in either productivity or banking efficiency due to procyclical firm entry. Third, a higher elasticity of substitution (that implies a lower mark-up) cuts the number of firms and makes aggregate output fall.

Keywords: DSGE model; extensive margin of activity; financial frictions (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Published in Review of Development Economics, 2013, 17 (2), pp.301-318. ⟨10.1111/rode.12033⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Firm Entry under Financial Frictions (2013)
Working Paper: Firm entry under financial frictions (2011)
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:hal:journl:halshs-00816994

DOI: 10.1111/rode.12033

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().