A Comment on Nishimura, Nakajima, and Kiyota's "Does the natural selection mechanism still work in severe recessions? Examination of the Japanese economy in the 1990s"

Tae Okada and Charles Horioka ()

No 13298, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Nishimura et al. (2005) analyze the entry/exit behavior of Japanese firms during the 1990s and find that relatively efficient firms exited while relatively inefficient firms survived during the banking-crisis period of 1996-97. They conclude that the natural selection mechanism (NSM) apparently malfunctions during severe recessions, but we offer a more plausible interpretation: NSM continued to function effectively even during this period, but aberrant banking practices caused a shift in the type of natural selection from directional to disruptive selection, with the most efficient as well as the least efficient firms being favored and firms of intermediate efficiency being selected against.

JEL-codes: D21 D24 L11 O47 (search for similar items in EconPapers)
Date: 2007-08
Note: IO PR LS
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Citations: View citations in EconPapers (2)

Published as Okada, Tae & Horioka, Charles Yuji, 2008. "A comment on Nishimura, Nakajima, and Kiyota's "Does the natural selection mechanism still work in severe recessions? Examination of the Japanese economy in the 1990s"," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 517-520, August.

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Journal Article: A comment on Nishimura, Nakajima, and Kiyota's "Does the natural selection mechanism still work in severe recessions? Examination of the Japanese economy in the 1990s" (2008)
Working Paper: A Comment on Nishimura, Nakajima, and Kiyota's "Does the Natural Selection Mechanism Still Work in Severe Recessions? Examination of the Japanese Economy in the 1990s" (2007)
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