Slow Recoveries

Raphael Bergoeing and Norman Loayza ()

No 244, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: Economies respond differently to aggregate shocks that reduce output. While some countries rapidly recover their pre-crisis trend, others stagnate. Recent studies provide empirical support for a connection between aggregate growth and plant dynamics through their effect on productivity: the entry and exit of firms and the reallocation of resources from less to more efficient firms explain a relevant part of transitional productivity dynamics. In this paper we use a stochastic general equilibrium model with heterogeneous firms to study the effect on aggregate short-run growth of policies that distort the process of birth, growth and death of firms, as well as the reallocation of resources across economic units. Our findings show that indeed, policies that alter plant dynamics can explain slow recoveries. Associated output losses are large

Keywords: productivity growth; plant dynamics; policy; general equilibrium. (search for similar items in EconPapers)
JEL-codes: D21 D24 L16 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-ent
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Citations: View citations in EconPapers (20)

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Related works:
Journal Article: Slow recoveries (2004)
Working Paper: Slow recoveries (2004)
Working Paper: Slow Recoveries (2004)
Working Paper: Slow Recoveries (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed004:244

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