IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v106y2016i5p214-18.html
   My bibliography  Save this article

Firm Entry and Macroeconomic Dynamics: A State-Level Analysis

Author

Listed:
  • François Gourio
  • Todd Messer
  • Michael Siemer

Abstract

Using an annual panel of US states over the period 1982-2014, we estimate the response of macroeconomic variables to a shock to the number of new firms (startups). We find that these shocks have significant effects that persist for many years on real GDP, productivity, and population. This is consistent with simple models of firm dynamics where a "missing generation" of firms affects productivity persistently.

Suggested Citation

  • François Gourio & Todd Messer & Michael Siemer, 2016. "Firm Entry and Macroeconomic Dynamics: A State-Level Analysis," American Economic Review, American Economic Association, vol. 106(5), pages 214-218, May.
  • Handle: RePEc:aea:aecrev:v:106:y:2016:i:5:p:214-18
    Note: DOI: 10.1257/aer.p20161052
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/articles?id=10.1257/aer.p20161052
    Download Restriction: no

    File URL: https://www.aeaweb.org/aer/data/10605/P2016_1052_data.zip
    Download Restriction: no

    File URL: https://www.aeaweb.org/aer/ds/10605/P2016_1052_ds.zip
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Òscar Jordà, 2005. "Estimation and Inference of Impulse Responses by Local Projections," American Economic Review, American Economic Association, vol. 95(1), pages 161-182, March.
    2. Gian Luca Clementi & Dino Palazzo, 2010. "Entry, Exit, Firm Dynamics, and Aggregate Fluctuations," Working Paper series 27_10, Rimini Centre for Economic Analysis.
    3. Erzo G. J. Luttmer, 2012. "Slow convergence in economies with firm heterogeneity," Working Papers 696, Federal Reserve Bank of Minneapolis.
    4. Benjamin Pugsley & Aysegul Sahin & Fatih Karahan, 2015. "Understanding the 30 year Decline in Business Dynamism: a General Equilibrium Approach," 2015 Meeting Papers 1333, Society for Economic Dynamics.
    5. Michael Siemer, 2014. "Firm Entry and Employment Dynamics in the Great Recession," Finance and Economics Discussion Series 2014-56, Board of Governors of the Federal Reserve System (U.S.).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Konon, Alexander & Fritsch, Michael & Kritikos, Alexander S., 2018. "Business cycles and start-ups across industries: An empirical analysis of German regions," Journal of Business Venturing, Elsevier, vol. 33(6), pages 742-761.
    2. Thorsten Drautzburg, 2016. "Just How Important Are New Businesses?," Economic Insights, Federal Reserve Bank of Philadelphia, vol. 1(4), pages 1-7, October.
    3. Neira, Julian & Singhania, Rish, 2017. "The Role of Corporate Taxes in the Decline of the Startup Rate," MPRA Paper 81662, University Library of Munich, Germany.
    4. Roger M. Gomis & Sameer Khatiwada, 2017. "Firm dynamics and business cycle: What doesn't kill you makes you stronger?," IHEID Working Papers 03-2017, Economics Section, The Graduate Institute of International Studies.
    5. Alexander Konon & Michael Fritsch & Alexander Kritikos, 2017. "Business Cycles and Start-ups across Industries: an Empirical Analysis for Germany," Jena Economic Research Papers 2017-013, Friedrich-Schiller-University Jena.
    6. Todd Messer & Michael Siemer & Francois Gourio, 2016. "A Missing Generation of Firms? Aggregate Effects of the Decline in New Business Formation," 2016 Meeting Papers 752, Society for Economic Dynamics.
    7. Simon Mongey & Gianluca Violante & Alessandro Gavazza, 2014. "What Shifts the Beveridge Curve? Recruitment Effort and Financial Shocks," 2014 Meeting Papers 1014, Society for Economic Dynamics.
    8. Sedláček, Petr, 2020. "Lost generations of firms and aggregate labor market dynamics," Journal of Monetary Economics, Elsevier, vol. 111(C), pages 16-31.
    9. Giovanni Dosi & Mauro Napoletano & Andrea Roventini & Tania Treibich, 2019. "Debunking the granular origins of aggregate fluctuations: from real business cycles back to Keynes," Journal of Evolutionary Economics, Springer, vol. 29(1), pages 67-90, March.
    10. Fernando Alvarez & Francesco Lippi & Juan Passadore, 2017. "Are State- and Time-Dependent Models Really Different?," NBER Macroeconomics Annual, University of Chicago Press, vol. 31(1), pages 379-457.
    11. Bonciani, Dario, 2015. "Estimating the effects of uncertainty over the business cycle," MPRA Paper 65921, University Library of Munich, Germany.
    12. Emin Dinlersoz & Henry Hyatt & Hubert Janicki, 2019. "Who Works for Whom? Worker Sorting in a Model of Entrepreneurship with Heterogeneous Labor Markets," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 34, pages 244-266, October.
    13. Oscar Jorda, 2007. "Inference for Impulse Responses," Working Papers 77, University of California, Davis, Department of Economics.
    14. Bellia, Mario & Christensen, Kim & Kolokolov, Aleksey & Pelizzon, Loriana & Renò, Roberto, 2020. "High-frequency trading during flash crashes: Walk of fame or hall of shame?," SAFE Working Paper Series 270, Leibniz Institute for Financial Research SAFE.
    15. Alessandro Barattieri & Matteo Cacciatore, 2020. "Self-Harming Trade Policy? Protectionism and Production Networks," NBER Working Papers 27630, National Bureau of Economic Research, Inc.
    16. Alesina, Alberto & Barbiero, Omar & Favero, Carlo A. & Giavazzi, Francesco & Paradisi, Matteo, 2017. "The effects of Fiscal Consolidations: Theory and Evidence," CEPR Discussion Papers 12016, C.E.P.R. Discussion Papers.
    17. Paul Hubert & Fabien Labondance, 2016. "Central Bank Sentiment and Policy Expectations," Sciences Po publications 2016-29, Sciences Po.
    18. Vasco M. Carvalho & Basile Grassi, 2019. "Large Firm Dynamics and the Business Cycle," American Economic Review, American Economic Association, vol. 109(4), pages 1375-1425, April.
    19. Gete, Pedro, 2018. "Lending standards and macroeconomic dynamics," Working Paper Series 2207, European Central Bank.
    20. Petrosky-Nadeau, Nicolas, 2013. "TFP during a credit crunch," Journal of Economic Theory, Elsevier, vol. 148(3), pages 1150-1178.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:106:y:2016:i:5:p:214-18. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael P. Albert). General contact details of provider: http://edirc.repec.org/data/aeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.