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Entry and Exit Echoes

  • Boyan Jovanovic

    (New York University)

  • Chung-Yi Tse

    (Hong Kong University)

While aggregate data do not show the investment echoes predicted by vintage-capital models, echoes arise in rates of entry and exit of firms at the industry level. Moreover, industries where prices decline rapidly experience early 'shakeouts'. The relation emerges naturally in a vintage-capital model in which exit of firms sometimes accompanies the replacement of their capital, and in which a shakeout is the first replacement 'echo' of the capital created when the industry is born. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2009.07.004
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 13 (2010)
Issue (Month): 3 (July)
Pages: 514-536

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Handle: RePEc:red:issued:09-105
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