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Productivity growth, firm turnover and new varieties

Thomas von Brasch (), Arvid Raknerud () and Diana-Cristina Iancu ()

No ESCoE DP-2018-11, Economic Statistics Centre of Excellence (ESCoE) Discussion Papers from Economic Statistics Centre of Excellence (ESCoE)

Abstract: In this paper, we reconcile two different strands of the literature: the literature on how new goods impact prices and the literature on productivity growth and firm turnover. The decomposition we propose generalises the framework currently used in the literature. Moreover, we extend the estimator for the demand elasticity, proposed by Feenstra (1994) and supplemented by Soderbery (2015). To illustrate the decomposition and estimator, we analyse the case of firm turnover in Norway. Our results indicate that net creation of new varieties from firm turnover contributes by about one half percentage point to annual aggregate productivity growth.

Keywords: Aggregation; Productivity growth; New varieties; Demand elasticity; Panel data; Two-stage estimator (search for similar items in EconPapers)
JEL-codes: C43 E24 O47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff and nep-mac
Date: 2018-07
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