Firm Entry and Exit and Aggregate Growth

Jose Asturias, Sewon Hur, Timothy Kehoe and Kim Ruhl

No 23202, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using data from Chile and Korea, we find that a larger fraction of aggregate productivity growth is due to firm entry and exit during fast-growth episodes compared to slow-growth episodes. Studies of other countries confirm this empirical relationship. We develop a model of endogenous firm entry and exit based on Hopenhayn (1992). Firms enter with efficiencies drawn from a distribution whose mean grows over time. After entering, a firm’s efficiency grows with age. In the calibrated model, reducing entry costs or barriers to technology adoption generates the pattern we document in the data. Firm turnover is crucial for rapid productivity growth.

JEL-codes: E22 O10 O38 O47 (search for similar items in EconPapers)
Date: 2017-02
New Economics Papers: this item is included in nep-ent, nep-mac and nep-tid
Note: EFG IO
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Citations: View citations in EconPapers (23)

Published as Jose Asturias & Sewon Hur & Timothy J. Kehoe & Kim J. Ruhl, 2023. "Firm Entry and Exit and Aggregate Growth," American Economic Journal: Macroeconomics, vol 15(1), pages 48-105.

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Related works:
Journal Article: Firm Entry and Exit and Aggregate Growth (2023)
Working Paper: Firm Entry and Exit and Aggregate Growth (2021)
Working Paper: Firm Entry and Exit and Aggregate Growth (2020)
Working Paper: Firm Entry and Exit and Aggregate Growth (2018)
Working Paper: Firm Entry and Exit and Aggregate Growth (2017)
Working Paper: Firm Entry and Exit and Aggregate Growth (2016)
Working Paper: Firm Entry and Exit and Aggregate Growth (2015)
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