Barriers to Firm Entry, Financial Constraints, and Productivity

Timothy Kehoe, Sewon Hur, Kim J. Ruhl and Jose Asturias
Additional contact information
Kim J. Ruhl: NYU Stern
Jose Asturias: University of Minnesota

No 687, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: We construct a model in which aggregate growth is driven by the continual entry of new firms that face barriers to entry that are exacerbated by financial frictions. We show that economies with more severe financial frictions have lower levels of output and consumption along the balanced growth path compared to economies with lower levels of financial frictions, even though all economies grow at the same, constant, rate. Improvements in financial markets generate faster-than-trend growth as the economy transitions to the new balanced growth path. The model generates sharp predictions regarding the rate of firm creation and aggregate output levels, as well as aggregate growth rates; these predictions are borne out in the cross country data.

Date: 2011
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed011:687

Access Statistics for this paper

More papers in 2011 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().