Limited Re-Entry and Business Cycles

Patrick Macnamara

Centre for Growth and Business Cycle Research Discussion Paper Series from Economics, The University of Manchester

Abstract: This paper builds a model of firm dynamics to study the consequences of "limited re-entry" for macroeconomic dynamics. Matched individual-level data from the Current Population Survey indicate that only 8% of unemployed chief executives, on average, find employment again as a chief executive after 12 months. Given the close link between entrepreneurs and chief executives, this suggests that it is very difficult for exiting entrepreneurs to "re-enter" in the future. The model, calibrated to match this observation, indicates that "limited re-entry" has made business cycles more volatile and persistent.

Pages: 53 pages
Date: 2014
New Economics Papers: this item is included in nep-ent and nep-mac
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Journal Article: LIMITED RE-ENTRY AND BUSINESS CYCLES (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:man:cgbcrp:194

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