scholarly journals Entry, Exit, Firm Dynamics, and Aggregate Fluctuations

2016 ◽  
Vol 8 (3) ◽  
pp. 1-41 ◽  
Author(s):  
Gian Luca Clementi ◽  
Berardino Palazzo
Keyword(s):  
Firm Dynamics ◽  
Causal Link ◽  
Entry And Exit ◽  
Aggregate Fluctuations ◽  
Slow Recovery ◽  
Aggregate Shocks ◽  
The Great Recession ◽  
The Common ◽  
Aggregate Dynamics ◽  
Firm Entry And Exit

Firm entry and exit amplify and propagate the effects of aggregate shocks, leading to greater persistence and unconditional variation of aggregate quantities. Following a positive aggregate shock, entry rises. As in the data, entrants are small and their initial impact on aggregate dynamics is negligible. However, as the common productivity component reverts to its unconditional mean, the youngsters that survive grow larger, generating a wider and longer expansion than in a scenario without entry or exit. The model also identifies a causal link between the drop in establishments at the outset of the Great Recession and the subsequent slow recovery. (JEL D21, D92, E22, E24, E32, G31, L11)

scholarly journals Firm Entry and Exit during Recessions

2021 ◽  
Author(s):  
João Ayres ◽  
Gajendran Raveendranathan
Keyword(s):  
Great Recession ◽  
Firm Dynamics ◽  
Firm Entry ◽  
Entry And Exit ◽  
Young Firms ◽  
Collateral Constraint ◽  
The Great Recession ◽  
Productivity Shock ◽  
Quantitative Results ◽  
Firm Entry And Exit

We analyze shocks to productivity, collateral constraint (credit shock), firm operation, and labor disutility in a model of firm dynamics with entry and exit. Shocks to firm operation and labor disutility capture COVID-19 lockdowns. Compared to the productivity shock, the credit and the lockdown shocks generate larger changes in firm entry and exit. The credit shock accounts for lower entry, higher exit, and concentration of exit among young firms during the Great Recession. The lockdown shocks predict a large fall in entry and rise in exit followed by a sharp rebound. In both recessions, changes in entry and exit account for 10-20 percent of the fall in output and hours. Finally, we discuss how the modeling of potential entrants matters for the quantitative results.

Aggregate Recruiting Intensity

2018 ◽  
Vol 108 (8) ◽  
pp. 2088-2127 ◽  
Author(s):  
Alessandro Gavazza ◽  
Simon Mongey ◽  
Giovanni L. Violante
Keyword(s):  
Labor Market ◽  
Great Recession ◽  
Equilibrium Model ◽  
Random Search ◽  
Firm Dynamics ◽  
Hiring Decisions ◽  
Aggregate Shocks ◽  
Fast Growing ◽  
The Great Recession ◽  
Matching Efficiency

We develop an equilibrium model of firm dynamics with random search in the labor market where hiring firms exert recruiting effort by spending resources to fill vacancies faster. Consistent with microevidence, fast-growing firms invest more in recruiting activities and achieve higher job-filling rates. These hiring decisions of firms aggregate into an index of economy-wide recruiting intensity. We study how aggregate shocks transmit to recruiting intensity, and whether this channel can account for the dynamics of aggregate matching efficiency during the Great Recession. Productivity and financial shocks lead to sizable procyclical fluctuations in matching efficiency through recruiting effort. Quantitatively, the main mechanism is that firms attain their employment targets by adjusting their recruiting effort in response to movements in labor market slackness. (JEL D22, E24, E32, J23, J41, J63, M51)

Understanding entry and exit: a business cycle accounting approach

2016 ◽  
Vol 16 (1) ◽  
Author(s):  
Patrick Macnamara
Keyword(s):  
Business Cycle ◽  
Firm Dynamics ◽  
Entry And Exit ◽  
Aggregate Shocks ◽  
Business Cycle Accounting ◽  
Cyclical Fluctuations ◽  
Aggregate Economy

AbstractThis paper considers a model of firm dynamics to study how well aggregate shocks account for fluctuations in the entry and exit of establishments. To do this, I construct measures of aggregate technology, labor and investment shocks. Under reasonable parameters, the model indicates that labor shocks (and not technology or investment shocks) best account for cyclical fluctuations in entry and exit rates. Moreover, this has had significant implications for the aggregate economy, as entry and exit have made output and hours more volatile and persistent.

scholarly journals Labour Reallocation in Recession and Recovery: Evidence for Europe

2019 ◽  
Vol 247 ◽  
pp. R32-R39 ◽  
Author(s):  
Eric Bartelsman ◽  
Paloma Lopez-Garcia ◽  
Giorgio Presidente
Keyword(s):  
European Union ◽  
Empirical Evidence ◽  
Great Recession ◽  
Firm Dynamics ◽  
Slow Recovery ◽  
Aggregated Data ◽  
The Great Recession ◽  
Cross Country ◽  
Silver Lining ◽  
The Eu

This paper builds upon Bartelsman, Lopez-Garcia, and Presidente (2018) and provides empirical evidence on the cyclical features of labour reallocation in a sample of European Union (EU) countries over the Great Recession and the slow recovery. The analysis makes use of cross-country micro-aggregated data on firm dynamics and productivity from release 6 of the ECB CompNet database. While productivity-enhancing reallocation generally is counter-cyclical, with a stronger effect providing a silver lining in downturns, it was weaker during the Great Recession in the EU, but reverted back to more normal patters in the most recent years.

scholarly journals Environmental Regulation and Exports: Evidence from the Comprehensive Air Pollution Policy in China

2021 ◽  
Vol 18 (3) ◽  
pp. 1316 ◽  
Author(s):  
Hong Chen ◽  
Yang Xu
Keyword(s):  
Air Pollution ◽  
Environmental Regulation ◽  
Pollution Prevention ◽  
Firm Entry ◽  
Entry And Exit ◽  
Control Plan ◽  
Heterogeneous Effects ◽  
The Impact ◽  
The City ◽  
Firm Entry And Exit

The impact of environmental regulation has been an important topic. Based on the Chinese Custom Database and China City Statistical Yearbook, this paper investigates the effect of environmental regulation on export values and explores potential mechanisms and heterogeneous effects. Taking advantage of China’s first comprehensive air pollution prevention and control plan, the Air Pollution Control in Key Zones policy, as a quasi-natural experiment, we employ the difference-in-differences method to examine the causal relationship between environmental regulation and exports. We find the statistically significant and negative effect of environmental regulation on exports at the city level. Moreover, we find that the potential mechanism is the change in export values caused by firm entry and exit, especially by exiters, rather than the change in the number of exporting firms in the city caused by firm entry and exit. In addition, we find the heterogeneous effects of environmental regulation based on the differences of environmental policy across cities and the Broad Economic Categories classification.

scholarly journals The European Union Green Deal: Clean Energy Wellbeing Opportunities and the Risk of the Jevons Paradox

Energies ◽  
2021 ◽  
Vol 14 (14) ◽  
pp. 4148
Author(s):  
Estrella Trincado ◽  
Antonio Sánchez-Bayón ◽  
José María Vindel
Keyword(s):  
Climate Change ◽  
European Union ◽  
Great Recession ◽  
International Institutions ◽  
Smart Cities ◽  
Clean Energy ◽  
The European Union ◽  
The Great Recession ◽  
Financial Framework ◽  
The Common

After the Great Recession of 2008, there was a strong commitment from several international institutions and forums to improve wellbeing economics, with a switch towards satisfaction and sustainability in people–planet–profit relations. The initiative of the European Union is the Green Deal, which is similar to the UN SGD agenda for Horizon 2030. It is the common political economy plan for the Multiannual Financial Framework, 2021–2027. This project intends, at the same time, to stop climate change and to promote the people’s wellness within healthy organizations and smart cities with access to cheap and clean energy. However, there is a risk for the success of this aim: the Jevons paradox. In this paper, we make a thorough revision of the literature on the Jevons Paradox, which implies that energy efficiency leads to higher levels of consumption of energy and to a bigger hazard of climate change and environmental degradation.

scholarly journals Innovation, Reallocation, and Growth

2018 ◽  
Vol 108 (11) ◽  
pp. 3450-3491 ◽  
Author(s):  
Daron Acemoglu ◽  
Ufuk Akcigit ◽  
Harun Alp ◽  
Nicholas Bloom ◽  
William Kerr
Keyword(s):  
Productivity Growth ◽  
Endogenous Entry ◽  
Entry And Exit ◽  
Firm Level ◽  
High Type ◽  
Percent Improvement ◽  
Us Census ◽  
Innovative Capacity ◽  
Firm Entry And Exit ◽  
Central Economic

We build a model of firm-level innovation, productivity growth, and reallocation featuring endogenous entry and exit. A new and central economic force is the selection between high- and low-type firms, which differ in terms of their innovative capacity. We estimate the parameters of the model using US Census microdata on firm-level output, R&D, and patenting. The model provides a good fit to the dynamics of firm entry and exit, output, and R&D. Taxing the continued operation of incumbents can lead to sizable gains (of the order of 1.4 percent improvement in welfare) by encouraging exit of less productive firms and freeing up skilled labor to be used for R&D by high-type incumbents. Subsidies to the R&D of incumbents do not achieve this objective because they encourage the survival and expansion of low-type firms. (JEL D21, D24, H25, L52, O31, O34)

scholarly journals The Financing of Ideas and the Great Deviation

2017 ◽  
Vol 17 (176) ◽  
Author(s):  
Daniel Garcia-Macia
Keyword(s):  
Great Recession ◽  
Heterogeneous Firms ◽  
Intangible Capital ◽  
Model Matching ◽  
Slow Recovery ◽  
Firm Level ◽  
The Great Recession ◽  
Financing Costs ◽  
Speed Up ◽  
Intangible Investment

Why did the Great Recession lead to such a slow recovery? I build a model where heterogeneous firms invest in physical and intangible capital, and can default on their debt. In case of default, intangible assets are harder to seize by creditors. Hence, intangible capital faces higher financing costs. This differential is exacerbated in a financial crisis, when default is more likely and aggregate risk bears a higher premium. The resulting fall in intangible investment amplifies the crisis, and gradual intangible spillovers to other firms contribute to its persistence. Using panel data on Spanish manufacturing firms, I estimate the model matching firm-level moments regarding intangibles and financing. The model captures the extent and components of the Great Recession in Spanish manufacturing, whereas a standard model without endogenous intangible investment would miss more than half of the GDP fall. A policy of transfers conditional on firm age could speed up the recovery, as young firms tend to be more financially constrained, particularly regarding intangible investment. Conditioning transfers on firm size or subsidizing credit (as in current E.U. policy) appears to be less effective.

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