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Entrepreneurship and Endogenous Volatility

Author

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  • Hernan Moscoso Boedo

    (University of Virginia)

  • Pablo D'Erasmo

    (University of Maryland)

Abstract

In this paper we document the relationship between idiosyncratic risk and non productive expenditures at the rm level from the Kauman Firm Survey. We then propose a model of entrepreneurial activity subject to nancial constraints where rms engage in borrowing to nance capital and wages, but also non productive expenses such as brand development, R&D, management consulting, marketing, etc. We allow for the non productive expenditures to aect the spread of the distribution from which shocks are drawn.

Suggested Citation

  • Hernan Moscoso Boedo & Pablo D'Erasmo, 2011. "Entrepreneurship and Endogenous Volatility," 2011 Meeting Papers 901, Society for Economic Dynamics.
  • Handle: RePEc:red:sed011:901
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    File URL: https://economicdynamics.org/meetpapers/2011/paper_901.pdf
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    References listed on IDEAS

    as
    1. Rui Castro & Gian Luca Clementi & Yoonsoo Lee, 2008. "Cross-sectoral variation in firm-level idiosyncratic risk," Working Paper 0812, Federal Reserve Bank of Cleveland.
    2. John C. Haltiwanger & Ron S. Jarmin & Javier Miranda, 2010. "Who Creates Jobs? Small vs. Large vs. Young," NBER Working Papers 16300, National Bureau of Economic Research, Inc.
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