American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Firm Entry and Exit and Aggregate Growth
American Economic Journal: Macroeconomics
vol. 15,
no. 1, January 2023
(pp. 48–105)
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.Citation
Asturias, Jose, Sewon Hur, Timothy J. Kehoe, and Kim J. Ruhl. 2023. "Firm Entry and Exit and Aggregate Growth." American Economic Journal: Macroeconomics 15 (1): 48–105. DOI: 10.1257/mac.20200376Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- E23 Macroeconomics: Production
- L13 Oligopoly and Other Imperfect Markets
- L60 Industry Studies: Manufacturing: General
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
- O32 Management of Technological Innovation and R&D
- O47 Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence