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Missing Growth from Creative Destruction

Philippe Aghion, Antonin Bergeaud (), Timo Boppart (), Peter Klenow and Huiyu Li
Additional contact information
Philippe Aghion: Harvard University [Cambridge], LSE - London School of Economics and Political Science, PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique
Peter Klenow: Stanford University [Stanford]
Huiyu Li: Federal Reserve Bank of San Francisco

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Abstract: For exiting products, statistical agencies often impute inflation from surviving products. This understates growth if creatively-destroyed products improve more than surviving ones. If so, then the market share of surviving products should systematically shrink. Using entering and exiting establishments to proxy for creative destruction, we estimate missing growth in US Census data on non-farm businesses from 1983 to 2013. We find missing growth (i) equaled about one-half a percentage point per year; (ii) arose mostly from hotels and restaurants rather than manufacturing; and (iii) did not accelerate much after 2005, and therefore does not explain the sharp slowdown in growth since then.

Date: 2019-08
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-02301545
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Published in American Economic Review, American Economic Association, 2019, 109 (8), pp.2795-2822. ⟨10.1257/aer.20171745⟩

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Journal Article: Missing Growth from Creative Destruction (2019) Downloads
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Working Paper: Missing Growth from Creative Destruction (2017) Downloads
Working Paper: Missing Growth from Creative Destruction (2017) Downloads
Working Paper: Missing Growth from Creative Destruction (2017) Downloads
Working Paper: Missing growth from creative destruction (2017) Downloads
Working Paper: Missing Growth from Creative Destruction (2017) Downloads
Working Paper: Missing Growth from Creative Destruction (2017) Downloads
Working Paper: Missing Growth from Creative Destruction (2017) Downloads
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