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Entry, Exit, and Investment-Specific Technical Change

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  • Roberto M. Samaniego

Abstract

Using European data, this paper finds that (i) industry entry and exit rates are positively related to industry rates of investment-specific technical change (ISTC); and (ii) the sensitivity of industry entry and exit rates to cross-country differences in entry costs depends on industry rates of ISTC. The paper constructs a general equilibrium model in which the rate of ISTC varies across industries and new investment-specific technologies can be introduced by entrants or by incumbents. In the calibrated model, equilibrium behavior is consistent with stylized facts (i) and (ii), provided the cost of technology adoption is increasing in the rate of ISTC. (JEL G31, L11, O31, O33)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.100.1.164
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 100 (2010)
Issue (Month): 1 (March)
Pages: 164-92

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Handle: RePEc:aea:aecrev:v:100:y:2010:i:1:p:164-92

Note: DOI: 10.1257/aer.100.1.164
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References

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Citations

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Cited by:
  1. Anna Ilyina & Roberto M. Samaniego, 2009. "A Multi-industry Model of Growth with Financing Constraints," IMF Working Papers 09/119, International Monetary Fund.
  2. Rui Castro & Gian Luca Clementi & Yoonsoo Lee, 2011. "Cross-Sectoral Variation in The Volatility of Plant-Level Idiosyncratic Shocks," NBER Working Papers 17659, National Bureau of Economic Research, Inc.
  3. J. David Brown & Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2012. "Does employing undocumented workers give firms a competitive advantage?," Working Paper 2012-02, Federal Reserve Bank of Atlanta.
  4. Camilo Mondragón-Vélez, 2009. "The probability of transition to entrepreneurship revisited: wealth, education and age," Annals of Finance, Springer, vol. 5(3), pages 421-441, June.
  5. Anna Ilyina & Roberto M. Samaniego, 2008. "Technology and Finance," IMF Working Papers 08/182, International Monetary Fund.
  6. Nicolas Petrosky-Nadeau, . "TFP during a Credit Crunch," GSIA Working Papers 2010-E70, Carnegie Mellon University, Tepper School of Business.
  7. Yu Sun, 2011. "Recent Developments in European Bank Competition," IMF Working Papers 11/146, International Monetary Fund.

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