Endogenous firm creation and destruction over the business cycle

Masashige Hamano

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: This paper revisits Schumpeterian destruction in a DSGE model based on monopolistic competition. Firms enter the market through a free entry condition and exit endogenously depending on their specific productivity level. The mechanism of endogenous destruction among heterogeneous firms is based on the probabilistic argument discussed in Melitz (2003). The models in the paper are successful in reproducing observed business cycle patterns for creation and destruction and other major economic variables. The models also feature typical characteristics of Schumpeterian economies as found in literature.

Keywords: entry and exit; firm heterogeneity; the Schumpeterian destruction; business cycles (search for similar items in EconPapers)
JEL-codes: D24 E23 E32 L11 L60 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-bec, nep-com and nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://hdl.handle.net/10993/15267 (application/pdf)

Related works:
Journal Article: Endogenous Turnover and Macroeconomic Dynamics (2017)
Working Paper: Endogenous Product Turnover and Macroeconomic Dynamic (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:13-04

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