Firm Entry and Exit and Aggregate Growth

Jose Asturias, Kim Ruhl, Sewon Hur and Timothy Kehoe
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Jose Asturias: Georgetown University in Qatar

No 1139, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: Applying the Foster, Haltiwanger, and Krizan (FHK) (2001) decomposition to plant-level manufacturing data from Chile and Korea, we find that a larger fraction of aggregate productivity growth is due to entry and exit during periods of fast GDP growth. Studies of other countries confirm this empirical relationship. To analyze this relationship, we develop a simple model of firm entry and exit based on Hopenhayn (1992) in which there are analytical expressions for the FHK decomposition. When we introduce reforms that reduce entry costs or reduce barriers to technology adoption into a calibrated model, we find that the entry and exit terms in the FHK decomposition become more important as GDP grows rapidly, just as in the data from Chile and Korea.

Date: 2018
New Economics Papers: this item is included in nep-bec, nep-dge, nep-ent, nep-sbm and nep-tid
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Citations: View citations in EconPapers (3)

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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 (2017)
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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Persistent link: https://EconPapers.repec.org/RePEc:red:sed018:1139

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