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Heterogeneous producers facing common shocks: An overlapping-generations example

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  • Green, Edward J.

Abstract

An analytically tractable model of a competitive, full-information economy is provided in which, for some parameter values, entry and exit over the course of the business cycle is concentrated among small firms. This model is intended to make the logical point that the relatively high sensitivity of small firms to business-cycle fluctuations does not necessarily indicate the presence of informational or incentive constraints in financial markets.

Suggested Citation

  • Green, Edward J., 2009. "Heterogeneous producers facing common shocks: An overlapping-generations example," Journal of Economic Theory, Elsevier, vol. 144(6), pages 2266-2276, November.
    • Handle: RePEc:eee:jetheo:v:144:y:2009:i:6:p:2266-2276
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    References listed on IDEAS

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    1. Lucas, Robert E, Jr & Prescott, Edward C, 1971. "Investment Under Uncertainty," Econometrica, Econometric Society, vol. 39(5), pages 659-681, September.
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    Cited by:

    1. Ohanian, Lee E. & Prescott, Edward C. & Stokey, Nancy L., 2009. "Introduction to dynamic general equilibrium," Journal of Economic Theory, Elsevier, vol. 144(6), pages 2235-2246, November.
    2. Robert Dekle & Hyeok Jeong & Nobuhiro Kiyotaki, 2014. "Dynamics of Firms and Trade in General Equilibrium," Working Papers 2014-3, Princeton University. Economics Department..

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