Slow convergence in economies with firm heterogeneity
This paper presents a simple formula that relates the tail index of the firm size distribution to the aggregate speed with which an economy converges to its balanced growth path. The fact that there are so many firms in the right tail implies that aggregate shocks that permanently destroy employment among incumbent firms, rather than cause these firms to scale back temporarily, are followed by slow recoveries. This is true despite the existence of many rapidly growing firms.
|Date of creation:||2012|
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- Giuseppe Moscarini & Fabien Postel-Vinay, 2012.
"The Contribution of Large and Small Employers to Job Creation in Times of High and Low Unemployment,"
Sciences Po publications
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- Carmen M. Reinhart & Kenneth S. Rogoff, 2009.
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Princeton University Press,
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- John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2010.
"Who Creates Jobs? Small vs. Large vs. Young,"
10-17, Center for Economic Studies, U.S. Census Bureau.
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