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Entry and Exit, Cycles, and Productivity Growth

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  • Van Ewijk, Casper

Abstract

This paper examines the impact of cycles on long-term growth in the presence of entry and exit of firms. It is argued that, whereas mild fluctuations may be beneficial for growth, more severe fluctuations will be detrimental for growth. The essential point is whether recessions go beyond the point that triggers (large-scale) exit of firms. Mild fluctuations may have a positive effect through the intertemporal substitution between production and productivity improving activities. Severe fluctuations, however, which lead to exit of firms, cause losses of knowledge and skills during recessions and are therefore bad for long-term growth. Copyright 1997 by Royal Economic Society.

Suggested Citation

  • Van Ewijk, Casper, 1997. "Entry and Exit, Cycles, and Productivity Growth," Oxford Economic Papers, Oxford University Press, vol. 49(2), pages 167-187, April.
  • Handle: RePEc:oup:oxecpp:v:49:y:1997:i:2:p:167-87
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    Cited by:

    1. Richard I.D. Harris & Qian Cher Li, "undated". "Export-market dynamics and the probability of firm closure: Evidence for the UK," Working Papers 2008_17, Business School - Economics, University of Glasgow.
    2. Kox, Henk L.M. & Leeuwen, George van, 2012. "Dynamic market selection in EU business services," MPRA Paper 41016, University Library of Munich, Germany.
    3. Campbell leith & Chol-Won Li, 2001. "Unemployment and the Productivity Slowdown: A Labour Supply Perspective," Working Papers 2001_13, Business School - Economics, University of Glasgow.
    4. Richard I. D. Harris & Qian Cher Li, 2010. "Export-Market Dynamics And The Probability Of Firm Closure: Evidence For The United Kingdom," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(2), pages 145-168, May.
    5. Tetsugen Haruyama & Campbell Leith, 2010. "Unemployment And The Productivity Slowdown: An Effciency Wage Perspective," The Japanese Economic Review, Japanese Economic Association, vol. 61(3), pages 301-319.
    6. Li, Chol-Won, 2000. "Growth and Output Fluctuations," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(2), pages 95-113, May.
    7. Richard Harris, 2001. "Comparing Regional Technical Efficiency in UK Manufacturing Plants: The Case of Northern Ireland 1974-1995," Regional Studies, Taylor & Francis Journals, vol. 35(6), pages 519-534.
    8. Kox, Henk L.M. & van Leeuwen, George, 2013. "Market selection and scale inefficiency – A new methodology applied to EU business services," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 77-94.
    9. Kox, Henk L.M. & Leeuwen, George van, 2011. "Measuring dynamic market selection by persistent scale inefficiencies - new methodology applied to EU business services," MPRA Paper 34986, University Library of Munich, Germany.

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