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Firm heterogeneity and macroeconomic dynamics: a datadriven investigation

Author

Listed:
  • Mihnea Constantinescu

    (Bank of Lithuania)

  • Aurelija Proskute

    (Bank of Lithuania)

Abstract

In this paper we offer a unique firm-level view of the empirical regularities underlying the evolution of the Lithuanian economy over the period of 2000 to 2014. Employing a novel data-set, we investigate key distributional moments of both the financial and real characteristics of Lithuanian firms. We focus in particular on the issues related to productivity, firm birth and death and the associated employment creation and destruction across industries, firm sizes and trade status (exporting vs. non-exporting). We refrain from any structural modeling attempt in order to map out the key economic processes across industries and selected firm characteristics. We uncover similar empirical regularities as already highlighted in the literature: trade participation has substantial benefits on firm productivity, the 2008 recession has had a cleansing effect on the non-tradable sector, firm birth and death are highly pro-cyclical. The richness of the dataset allows us to produce additional insights such as the change in the composition of assets and liabilities over the business cycles (tilting both liabilities and assets towards the short-term) or the increasing share of exporting firms but the constant share of importing ones since 2000.

Suggested Citation

  • Mihnea Constantinescu & Aurelija Proskute, 2018. "Firm heterogeneity and macroeconomic dynamics: a datadriven investigation," Bank of Lithuania Discussion Paper Series 7, Bank of Lithuania.
  • Handle: RePEc:lie:dpaper:7
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    File URL: https://www.lb.lt/en/publications/no-7-mihnea-constantinescu-aurelija-proskute-firm-heterogeneity-and-macroeconomic-dynamics-a-datadriven-investigation
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    Citations

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    Cited by:

    1. Linas Tarasonis & Jose Garcia-Louzao, 2021. "Productivity-Enhancing Reallocation during the Great Recession:Evidence from Lithuania," Bank of Lithuania Working Paper Series 86, Bank of Lithuania.

    More about this item

    Keywords

    productivity; firm dynamism; job creation and destruction; firm heterogeneity; Lithuanian economy;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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