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Endogenous Growth through Firm Entry, Exit and Imitation

Author

Listed:
  • Alain Gabler

    () (Economics European University Institute)

  • Omar Licandro

Abstract

A simple dynamic general equilibrium model is set up in which firms face idiosyncratic productivity shocks. Firms whose productivity has fallen too low exit, and entrants try to imitate the practice of existing firms, so that the expected productivity of entering firms is a function of current average productivity. Because of the resulting selection and imitation process, aggregate productivity in the economy grows endogenously. When calibrated to U.S. data, the model suggests that around 50 percent of productivity growth may be due to such a selection e¤ect

Suggested Citation

  • Alain Gabler & Omar Licandro, 2006. "Endogenous Growth through Firm Entry, Exit and Imitation," 2006 Meeting Papers 532, Society for Economic Dynamics.
  • Handle: RePEc:red:sed006:532
    as

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    References listed on IDEAS

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    1. Oded Galor & Omer Moav, 2002. "Natural Selection and the Origin of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1133-1191.
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    Cited by:

    1. Poschke, Markus, 2009. "Employment protection, firm selection, and growth," Journal of Monetary Economics, Elsevier, pages 1074-1085.
    2. Anna Ilyina & Roberto M. Samaniego, 2009. "A Multi-industry Model of Growth with Financing Constraints," IMF Working Papers 09/119, International Monetary Fund.

    More about this item

    Keywords

    Growth; Selection; Imitation; Entry and Exit;

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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