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A structural analysis of US entry and exit dynamics

Miguel Casares (), Hashmat Khan () and Jean-Christophe Poutineau

Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra from Departamento de Economía - Universidad Pública de Navarra

Abstract: We report empirical evidence indicating that US business formation has recently turned more volatile, procyclical and persistent due to changes in exit dynamics. To study these stylized facts, we estimate a DSGE model with endogenous entry and exit. Business units feature heterogeneous productivity and they shut down if the present value of expected future dividends falls below the current liquidation value. The estimation results imply structural changes in US exit dynamics after 2007: the semi- elasticity of the exit rate to critical productivity has increased and the average plant-level productivity has decreased.

Keywords: Endogenous entry and exit; DSGE models; US business cycles (search for similar items in EconPapers)
JEL-codes: E20 E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dge and nep-mac
Date: 2018
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