Firm Entry and Exit and Aggregate Growth

Jose Asturias; Sewon Hur; Timothy J. Kehoe; Kim J. Ruhl

doi:10.1257/mac.20200376

Firm Entry and Exit and Aggregate Growth

Jose Asturias, Sewon Hur, Timothy J. Kehoe, Kim J. Ruhl

Economics (Twin Cities)

Research output: Contribution to journal › Article › peer-review

17 Scopus citations

Abstract

Applying the Foster, Haltiwanger, and Krizan (2001) decomposition to plant-level manufacturing data from Chile and Korea, we find that the entry and exit of plants account for a larger fraction of aggregate productivity growth during periods of fast GDP growth. To analyze this relationship, we develop a model of firm entry and exit based on Hopenhayn (1992). 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 they do in the data from Chile and Korea.

Original language	English (US)
Pages (from-to)	48-105
Number of pages	58
Journal	American Economic Journal: Macroeconomics
Volume	15
Issue number	1
DOIs	https://doi.org/10.1257/mac.20200376
State	Published - 2023

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© 2023, American Economic Journal: Macroeconomics. All Rights Reserved.

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Firm Entry and Exit and Aggregate Growth

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