On the Ubiquity of Declining Business Dynamism

David Hummels and Kan Yue

No 32637, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent work documents declining business dynamism in the United States, with concerning implications for markups, innovation and productivity. Using import data for 146 countries over three decades we document a set of new stylized facts describing market dynamism world-wide. Market entry rates and the reallocation of market shares fall significantly over time. Young exporters experience rising prices, falling market shares, and increased exit probabilities relative to longer-tenured incumbents. While the variance of price shocks hitting markets is rising, long-tenured incumbents exhibit lower volatility in prices and the response of prices and quantities to tariff shocks are falling over time. These patterns hold for over 90 percent of countries and products suggesting the inadequacy of explanations that point to the macroeconomic or regulatory environment of particular countries or the unique industrial organization of particular products.

JEL-codes: D22 F14 L23 O40 (search for similar items in EconPapers)
Date: 2024-06
New Economics Papers: this item is included in nep-ifn, nep-inv and nep-mac
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