IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Firm Exit, Vintage Effect and the Business Cycle in Norway

Listed author(s):
  • Salvanes, K.G.
  • Tveteras, R.

In spite of the large and growing literature on producer heterogeneity and firm exit behavior, little attention has been paid to the vintage capital theory of firm exits as an alternative hypothesis to learning/selection. Interpreted at the firm level the vintage capital theory predicts that exit rates increase in the age of capital. The present paper uses a panel of Norwegian manufacturing plants and constructs an index of capital age in addition to the age of the establishment in order to disentangle the effects of selection/learning and vintage capital on exit rates. The empirical results suggest a U-shaped exit function in the age of the plant implying both a learning effect and a vintage capital effect. The vintage capital effect is present under different assumption concerning reinvestments and controlling for unobserved heterogeneity. The exit rates are found to depend on the business cycle in that exits increase in a severe downturn. Our results also support the assertion that recessions are periods of cleansing where old capital equipment is scrapped via exiting plants.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Paper provided by Norwegian School of Economics and Business Administration- in its series Papers with number 2/99.

in new window

Length: 28 pages
Date of creation: 1999
Handle: RePEc:fth:norgee:2/99
Contact details of provider: Postal:

Phone: 5595 9000
Fax: 5595 9100
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:fth:norgee:2/99. 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: (Thomas Krichel)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.