Credit frictions and the cleansing effect of recessions
Recessions are conventionally considered as times when the least productive rms are driven out of the market. Do credit frictions hamper this cleansing e ect of recessions? We build and calibrate a model of rm dynamics with endogenous exit and credit frictions to investigate this question. We nd that, despite their distortionary e ect on the selection of exiting rms, credit frictions do not reverse the cleansing e ect of recession. Average idiosyncratic productivity rises following an adverse aggregate shock. Our results also suggest that recessions have a modest impact on average productivity whatever the level of credit frictions
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Patrick Musso & Stefano Schiavo, 2008.
"The impact of financial constraints on firm survival and growth,"
Journal of Evolutionary Economics,
Springer, vol. 18(2), pages 135-149, April.
- Patrick Musso & Stefano Schiavo, 2007. "The Impact of Financial Constaints on Firm Survival and Growth," Documents de Travail de l'OFCE 2007-37, Observatoire Francais des Conjonctures Economiques (OFCE).
- Patrick Musso & Stefano Schiavo, 2007. "The Impact of Financial Constraints on Firms Survival and Growth," Working Papers hal-00973115, HAL.
- Patrick Musso & Stefano Schiavo, 2008. "The Impact of Financial Constraints on Firm Survival and Growth," Post-Print halshs-00721058, HAL.
- Patrick Musso & Stefano Schiavo, 2007. "The Impact of Financial Constraints on Firms Survival and Growth," Sciences Po publications 2007-37, Sciences Po.
- Chad Syverson, 2003.
"Product Substitutability and Productivity Dispersion,"
NBER Working Papers
10049, National Bureau of Economic Research, Inc.
- Chad Syverson, 2004. "Product Substitutability and Productivity Dispersion," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 534-550, May.
- Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1989.
"The Growth and Failure of U. S. Manufacturing Plants,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 104(4), pages 671-698.
- Dunne, T. & Roberts, M.J. & Samuelson, L., 1988. "The Growth And Failure Of U.S. Manufacturing Plants," Papers 1-87-5, Pennsylvania State - Department of Economics.
- Yoonsoo Lee & Toshihiko Mukoyama, 2008.
"Entry, Exit, and Plant-Level Dynamics over the Business Cycle,"
08-17, Center for Economic Studies, U.S. Census Bureau.
- Yoonsoo Lee & Toshihiko Mukoyama, 2008. "Entry, exit and plant-level dynamics over the business cycle," Working Paper 0718, Federal Reserve Bank of Cleveland.
- Toshihiko Mukoyama & Yoonsoo Lee, 2008. "Entry, Exit, and Plant-level Dynamics over the Business Cycle," 2008 Meeting Papers 454, Society for Economic Dynamics.
- McDonald, Robert L & Siegel, Daniel R, 1985. "Investment and the Valuation of Firms When There Is an Option to Shut Down," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(2), pages 331-49, June.
- Del Gatto, Massimo & Ottaviano, Gianmarco & Pagnini, Marcello, 2007.
"Openness to Trade and Industry Cost Dispersion: Evidence from a Panel of Italian Firms,"
CEPR Discussion Papers
6336, C.E.P.R. Discussion Papers.
- Massimo Del Gatto & Gianmarco I. P. Ottaviano & Marcello Pagnini, 2008. "Openness To Trade And Industry Cost Dispersion: Evidence From A Panel Of Italian Firms," Journal of Regional Science, Wiley Blackwell, vol. 48(1), pages 97-129.
- Massimo Del Gatto & Gianmarco I.P. Ottaviano & Marcello Pagnini, 2007. "Openess to trade and industry cost dispersion: Evidence from a panel of Italian firms," Temi di discussione (Economic working papers) 635, Bank of Italy, Economic Research and International Relations Area.
- Min Ouyang, 2005.
"The Scarring Effect of Recessions,"
050609, University of California-Irvine, Department of Economics.
- Barlevy, Gadi, 2003. "Credit market frictions and the allocation of resources over the business cycle," Journal of Monetary Economics, Elsevier, vol. 50(8), pages 1795-1818, November.
- Tauchen, George, 1986. "Finite state markov-chain approximations to univariate and vector autoregressions," Economics Letters, Elsevier, vol. 20(2), pages 177-181.
- Douglas Holtz-Eakin & David Joulfaian & Harvey S. Rosen, 1993.
"Sticking it Out: Entrepreneurial Survival and Liquidity Constraints,"
NBER Working Papers
4494, National Bureau of Economic Research, Inc.
- Holtz-Eakin, Douglas & Joulfaian, David & Rosen, Harvey S, 1994. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 53-75, February.
- Douglas Holtz-Eakin & David Joulfaian & Harvey Rosen, 1993. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Working Papers 698, Princeton University, Department of Economics, Industrial Relations Section..
- Dixit, A., 1988.
"Entry And Exit Decisions Under Uncertainty,"
91, Princeton, Department of Economics - Financial Research Center.
When requesting a correction, please mention this item's handle: RePEc:vir:virpap:403. 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: (Debby Stanford)
If references are entirely missing, you can add them using this form.